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THEORY 


—  OF 


BOOKKEEPING 


By 
O.  M.  POWERS 


Published  by  the 
METROPOLITAN  TEXT  BOOK  CO. 

CHICAGO 


COPYRiGHT,   \9ld 
BY 

METROPOLITAN  TEXT  BOOK  CO. 


INTRODUCTORY 


Bookkeeping  is  the  science  of  accounts  and  the  systematic  method  of 
keeping  business  records. 

The  system  of  bookkeeping  now  in  use  throughout  the  Western  world  originateJ 
with  the  Venetians  about  the  close  of  the  fifteenth  century,  and  was  an  outgrowth  of 
the  extensive  commerce  carried  on  by  Venice,  Florence,  and  other  Italian  cities  at  that 
time. 

Single  Entry  is  a  method  of  bookkeeping  in  which  a  record  is  kept  of 
accounts  with  persons  only. 

The  customers  are  charged  with  purchases  or  credited  with  payments,  but  no  rec- 
ord is  kept  of  the  merchandise  or  other  property  which  enters  into  the  transaction.  This 
method  is  open  to  the  objection  that  the  record  is  incomplete.  Single  entry  is  little  used 
except  in  very  small  concerns. 

Double  Entry,  as  its  name  implies,  is  a  method  of  keeping  accounts 
in  whicli  every  debit  has  a  corresponding  credit. 

Under  this  method  the  commodities  or  things  which  enter  into  the  business  are 
debited  and  credited  the  same  as  persons,  thus  furnishing  a  record  of  the  cash,  goods 
or  other  property  belonging  to  the  business.  Since  every  debit  must  have  a  credit  of 
equal  amount,  the  books  should  always  be  in  balance,  and  this  equilibrium  of  debit  and 
credit  is  a  test  of  their  correctness. 

Debtor  and  Creditor.  A  debtor  is  one  who  owes  a  debt.  A  creditor 
is  one  to  whom  a  debt  is  owing. 

These  two  classes  of  persons  embrace  all  with  whom  any  house  sustains  business 
relations.  They  are  diametrically  opposite  in  character.  The  one  has  cost  the  business 
something  and  the  other  has  produced  or  furnished  the  business  something.  One  of 
these  classes  we  will  chargfC;  the  other  we  will  credit. 


4  INTRODUCTORY 

Debit  signifies  to  charge,  and  hence  we  debit  all  persons  who  owe  us, 
or  all  things  which  have  cost  us  something. 

Thus  we  debit  a  customer  for  the  goods  sold  him.  We  debit  all  things  received, 
because  they  cost  us  their  equivalent  in  whatever  we  gave  for  them. 

Credit  si  gnifies  to  trust,  or  give  credit  for,  and  hence  we  credit  all 
persons  whom  we  owe,  or  all  things  which  have  produced  us  something. 

For  example,  we  credit  one  who  pays  us.  We  credit  all  things  sold  or  disposed  of, 
because  such  things  have  produced  us  a  value  in  that  which  we  received  for  them. 

Original  Entry.  An  original  entry  is  the  first  record  made  of  a  trans- 
action. Any  book  in  which  first  entries  are  made  is  called  a  Book  of 
Original  Entry. 

Only  original  entry  books  are  admissible  as  evidence  in  courts  of  law.  Books  of 
Subsequent  Entry  are  those  to  which  entries  are  transferred. 

Item.  An  item  is  a  distinct  part  of  a  transaction,  either  a  debit  or  a 
credit. 

An  item  may  consist  of  cash  or  any  other  property.  It  may  consist  of  an  obligation 
owing  to  us,  or  by  us  to  another.     It  is  the  unit  of  bookkeeping. , 

A  Principal  Book  is  one  which  contains  an  integral  part  of  the  chain 
of  record,  or  which  cannot  be  dispensed  with. 
The  Journal  and  Ledger  are  principal  books. 

An  Auxiliary  Book  is  one  which  is  explanatory  of  some  other  book, 
or  is  not  absolutely  essential  to  the  complete  record. 
A  memorandum  book,  or  time  book  is  an  auxiliary  book. 


JOURNALIZING 


LESSON  I 


DOUBLE  ENTRY 
JOURNALIZING 

The  Journal  is  a  book  in  which  is  recorded  the  debits  and  credits  of 
each  transaction  in  proper  form,  together  with  a  full  explanation  of  such 
debits  and  credits,  or  a  history  of  the  transaction  as  it  occurred. 

The  journal  is  usually  a  book  of  original  entry  and  whenever  it  is,  the  history  of 
the  transaction  must  be  made  with  each  entry,  either  preceding  or  following  the  debits 
and  credits.  In  some  cases  the  journal  is  used  only  as  a  book  of  debits  and  credits,  the 
history  being  contained  in  another  book  called  a  Day  Book,  or  on  sheets  of  paper,  called 
"Order  Blanks,"  "Sales  Sheets,"  etc. 

Journalizing  consists  in  making  a  proper  entry  in  the  journal. 

Every  correct  journal  entry  must  balance, — the  total  of  the  debit  items  must 
equal  the  total  of  the  credit  items. 

From  the  explanation  of  debit  and  credit  previously  given,  we  de- 
duce the  following: 

GENERAL  RULE 

1.  Debit  what  you  receive,  or  what  costs  value. 

2.  Credit  what  you  dispose  of,  or  what  produces  value. 

This  is  a  universal  and  all-important  rule  in  bookkeeping  and  should  be  thoroughly 
memorized. 

EXAMPLES 
Jan.  2,  191..  Sold  John  Davis  for  cash,  10  bu.  apples  @$2.00,  $20.00 

191..  FORM  OF  JOURNAL. 


Jan. 


Cash 
{Br.  Item) 


for  cash  10  bu. 
( Explanation 


Mdse. 

(Cr.  Item) 

Sold  to  John  Davis 
apples  @  $2. 
or  History.) 


20 
{Dr.  Col) 


20 

{Cr.CoD 


By  inspection  of  the  above  we  see  that  this  journal  entry  consists  of 
four  parts.     First,  the  date,  being  the  year,  month  and  day;   Second,  the 


6  THEORY  OF  BOOKKEEPING 

debit  item,  being  that  which  was  received  or  cost  value,  (in  this  instance, 
cash)  together  witli  its  amount  in  the  Dr.  column;  Third,  the  credit  item, 
or  that  which  was  disposed  of,  or  produced  value,  (in  this  example  mer- 
chandise), with  its  corresponding  amount  in  the  Cr.  column;  and  Fourth, 
the  history  or  explanation  of  the  transaction  written  beneath. 

TO  THE  STUDENT 

First  write  the  date,  then  read  the  transaction  carefully  and  ask 
yourself  the  question,  "What  did  I  receive?"  or  "What  has  cost  value?," 
and  write  such  items  as  debits;  then  "What  did  I  dispose  of?"  or  "What 
produced  value?"  and  write  such  items  as  credits. 

Unless  otherwise  directed  by  the  teacher,  you  may  omit  the  history 
of  the  transaction  for  the  present,  in  order  to  save  time,  and  facilitate 
learning  the  principles. 

Cultivate  a  neat,  plain  and  business-like  style  of  writing  and  figures. 

Leave  a  blank  line  between  entries  and  three  blank  lines  at  the  bot- 
tom of  each  page. 

JOURNAL  TERMS 

Merchandise,  Mdse.,  is  a  term  applied  to  goods  and  ,wares  dealt  in  by 
the  concern  as  a  business. 

Cash  is  a  term  which  includes  money  of  every  kind,  such  as  coin, 
currency,  checks,  money  orders,  etc. 

Real  Estate  includes  houses  and  lands. 

Fixtures  includes  shelving,  counters,  show  cases,  office  safe,  etc. 

Stocks  and  Bonds.  These  are  certificates  of  stock  or  obligations  is- 
sued by  corporations  and  are  entered  under  the  names  which  they  bear; 
as,  Central  Telephone  Stock,  Citizens  Bank  Stock,  S.  P.  Railroad  Bonds. 

191.. 
Jan.  3.     Bought  of  Henry  Anderson  for  cash  10  brls.  flour  @  $5,  $50„ 

Mdse.  is  debtor,  because  we  received  it,  and  Cash    is   credit   because    we 
disposed  of  it.     {See  form,  page  7.) 

**   4.     Sold  William  Dawson  for  cash,  20  brls.  Greening  apples  @    $3, 


Cash  is  deblor,  because  we  received  it,  and    Mdse.    is    credit  because   we 
disposed  of  it.     {See  farm,  page  7  ) 

5.  Bought  of  Geo.  P  Fowler  &  Co.,  for  cash,  2  brls.  gasoline  50 
gal.  each  @  lie,  $11;  5  cans  polarine,  5  gal.  each  @  40c,  $10. 
Total  $21. 

Mdse,  is  debtor  because  we  received  it.     Enter  the  total  as   one    amount. 
Cash  is  credit. 


JOURNALIZING 


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*'   6.     Bought  of  Samuel  Davidson  for  cash,  our   store   building   and 

lot,  $3000. 

Real  Estate  is  debtor. 

**  8.  Sold  Amos  Pettibone  for  cash  50  boxes  Florida  oranges  @  $2.85 
$142.50;  10  boxes  grape  fruit  @  $4,  $40.     Total  $182.50. 

"   9.      Bought  of  Diebold  Safe  and  Lock  Co.,  for  cash,  a  safe   for   our 

office,  $75. 

Debit  fixtures. 

"  10.  Sold  J.  C.  Watson  for  cash,  50  bu.  Early  Rose  potatoes  @  60c, 
$30;  10  cases  eggs  12  doz.  each  @  25c,  $15;  32  gal.  cider  vinegar 
@  18c,  $5.76.     Total  $50.76. 


8  THEORY  OF  BOOKKEEPING 

191.. 

Jan.  11.  Bought  of  S.  P.  Brewster  &  Co.,  10 shares  Citizen's  Bank  Stock 
@  $100,  $1000.     Paid  cash  for  same. 
Citizen's  Bank  Stock  is  debtor. 

**  12.  Bought  of  Union  Show  Case  Co.,  for  cash,  a  new  8  ft.  show  case 
for  our  store  $18.50. 

"  13.  Sold  A.  M.  Duncan,  4  brls.  lump  rock  salt  @  $3,  $12.  Received 
in  payment  30  bu.  oats  @  40c,  $12. 

**  15.  Sold  to  Charles  L.  Henderson,  5  shares  Citizens  Bank  Stock  @ 
$110,  $550.     Received  in  payment  cash. 

"   16.  Sold  William  C.  Wood  for  cash,  2  brls.  flour  @  $5.50,  $11. 

"  17.  Bought  of  Thomas  &  Smith  for  cash,  50  bu.  seed  corn  @  $1.00, 
$50;  200  lbs.  lawn  grass  seed  at  6c,  $12.     Total  $62. 

"  19.  Sold  to  Henry  Wilson,  5  shares  Citizen's  Bank  Stock  at  $120, 
$600.     Received  in  payment  8  lots  in  Ardmore  @  $200,  $600. 

**  20.  Bought  of  Sprague,  Warner  &  Co.,  for  cash,  5  bales  Rio  coffee 
100  lbs.  each  @  22c  $110;  10  drums  Remo  brand  coffee  60  lbs. 
each  @  14c,  $84.     Total  $194. 

"  22.  Bought  of  Lawrence  Nelson  for  cash,  20  shares  Central  Tele- 
phone Stock  @  $85,  $1700. 

**  23.  Sold  to  Coyne  Brothers  for  cash,  5  cases  eggs,  12  doz.  each,  @ 
28c,  $14.80;  10  boxes  ginger  snaps,  40  lbs.  each  @  8c,  $32. 
Total  $46.80. 

**  25.  Bought  of  Frank  W.  Wright  &  Co.,  8  shares  Southern  Pacific 
Railroad  Stock  @  $94.50,  $756.00.  Gave  in  payment  10  shares 
Central  Telephone  Stock  @  $75.60.     Total  $756.00 

"  27.  Sold  to  John  Davis,  20  bu.  seed  corn  @  $1.25,  $25;  10  bu.  oats 
at  50c,  $5;  4  brls.  lump  rock  salt  @  4,  $16.  Total  $46.  Received 
in  payment  cash  $46. 

'*   3i.  John  Davis  has  returned  the  4  brls.  lump   rock  salt  which  we 
sold  to  liim  on  the  27th,  same  not  being   satisfactory,    and   we 
have  refunded  him  the  amount  which  he  paid,  in  cash  $16.00 
This  is  the  same  as  buying  the  goods  back  from  him. 

To  the  Student.  After  journalizing  the  above  transactions  submit 
your  paper  to  the  teacher  for  inspection.  If  correct,  you  may  copy  it 
into  your  journal.  Use  care  and  neatness  in  your  writing  and  figures. 
Rule  a  red  line  between  the  entries. 


JOURNALIZING 


LESSON  II 

PERSONAL  ACCOUNTS 

Personal  Accounts  are  those  opened  with  persons,  firms  or  corpo- 
rations. 

On  Account.  When  a  purchase  or  sale  is  made  on  account  or  on 
credit,  we  must  credit  or  debit  the  person's  name.  Likewise  a  payment 
received  or  given  on  account,  requires  us  to  enter  the  item  as  a  debit  or 
credit  under  the  name  of  the  person. 


FORM  OF  BILL. 


CHICAGO.  Jan.  18.  191. 


Bought  of  WELLS,  BROWN  &  CO, 


Temu:    30  days 


A  Bill  is  a  written  statement  of  goods  sold  or  services  rendered,  {See 
form  above),  showing  the  quantity  and  price  of  the  articles  sold  with  the 
total,  terms  of  sale,  etc. 

Invoice  is  almost  synonymous  with  bill  but  is  a  term  used  chiefly 
when  goods  are  bought  in  considerable  quantities. 


10 


THEORY  OF  BOOKKEEPING 


Receipt  A  receipt  is  a  written  acknowledgment  of  a  payment.  It 
may  be  a  distinct  and  formal  writing  or  only  the  words  "Received  Pay- 
ment" with  the  date  and  sellers  name  written  upon  the  bottom  of  the 
bill.  In  this  manner  a  bill  is  said  to  be  "receipted. "  Receipts  should 
always  be  preserved. 

FORM  OP  RECEIPT 


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Rule  II. 
Rule  III. 


191.. 
Feb.  1. 


3. 


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5. 

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6. 

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7. 

When  you  owe  a  person,  or  a  person  pays  you   on   account,   credit 
that  person. 

When  a  person  owes  you,  or  you  pay  a  person   on   account,    debit 
that  person. 


Bought  of  Henry  Duncan,  20brls.  Minnesota  flour  @  $5,   $100, 
for  which  I  owe  him. 
Henry  Duncan  is  credited. 

Sold  A.  L.  Warner  a  bill  of  goods  amounting  to  $200  for  which 
he  owes  me. 

A.  L.  Warner  is  debited. 

Bought  of  Herman  Davidson,  Mdse.    on  account   as  per   bill, 
$500. 

Sold  Haskell  Bros,  on  account,  due  in  30  days,  50  brls.  apples 
@  $3,  $150. 

Paid  Henry  Duncan  on  account,  $75  in  cash. 

Received  of  A.  L.  Warner,  cash  on  account  $150. 

Sold  C.  W.  Russell  for  cash,  200  crates  pineapples    @   $2.75, 
$550;  boxes  60  Florida  oranges  $4,  $240.     Total  $790. 


191..  JOURNALIZING  1 1 

Feb.  8.       Bought  for  cash  of  Chicago  Pure  Food   Co.,    25   cans   peanut 
butter  @  60c,  $15. 

8.       Paid  Herman  Davidson  on  account,  cash  $250. 

"9.       A.  L.  Warner  has  paid  me  the  balance  which  he  owes,  $50,  in 
cash. 

*'    10.     Bought  of  C.  S.  Hammond  &  Co.  on  account,  a  pair  of  counter 
scales  for  the  store 


11.  Sold  William  W.  Barnard  a  bill  of  Mdse.  amounting  to  $318  to 
be  paid  for  in  30  days. 

13.  Sold  toChas.  E.  Mason  100  brls.  flour  @  $4.80,  $480;  60  cases 
eggs,  12  doz.  each  @  30c,  $216.  Total  $696.  Received  in 
payment  8  shares  Union  Bank  Stock  @  $87,  $696. 

13.  Paid  Herman  Davidson  cash,  balance  due  him  $250. 

14.  Sold  Watson  &  Newell  a  bill  of  goods  amounting  to  $800  to  be 
paid  for  in  10  days. 

15.  Paid  C.  S.  Hammond  &  Co.  cash  $16  for  the  counter  scales 
bought  of  them  on  the  10th. 

16.  Bought  of  Geo.  Provine  on  60  days  credit,  30  brls.  cider  @  $7, 
$210;  150  brls.  Greening  apples  @  $2.40,  $360.     Total  $570. 

17.  Received  of  Austin  Parker,  cash  in  settlement  of  our  bill  sold 
him  last  month  $126.40. 

17.     Watson  &  Newell  have  returned  a  part  of  the  goods  sold  them 
on  the  14th,  amounting  to  $86,  for  which  we  give  them  credit. 
Debit  Mdse. 

20.  Borrowed  cash  of  A.  M.  Jones  $500,  to  be  repaid  in  two  days. 

21.  Paid  A.  C.  Baldwin  cash  for  the  balance  which  we  owe  him, 
amounting  to  $380. 

23.     Received  of  William  W.  Barnard  on  account,  cash  $218. 

26.  Sold  A.  M.  Bullard  50  shares  Chicago  Telephone  Stock  @ 
$110,  $5500.  Received  in  full  payment,  bouse  and  lot  at  No. 
237  Greenwood  Ave. 

27.  John  Hunter  has  this  day  paid  us  the  amount  of  his  account 
in  cash,  $63.25. 

28.  Loaned  M.  L.  Walker,  cash  $75  as  a  favor,  temporarily. 


12 


THEORY  OF  BOOKKEEPING 


LESSON  III 


PROMISSORY  NOTES 


A  Promissory  Note  is  a  written  promise  to  pay  a  certain  sum  of 
money  to  a  person  named  therein,  at  a  specified  time. 

Promissory  notes  are  a  species  of  "Commercial  Paper,"  and  are  a  great  convenience 
in  business,  as  they  are  transferred  from  one  person  to  another  the  same  as  other  kinds 
of  property. 

The  Maker  of  a  note  is  the  person  who  signs  it. 

The  Payee  is  the  person  to  whom  the  note  is  payable. 

A  note  is  said  to  be  *'in  favor"  of  the  payee,  or  person  named  therein. 

An  Endorser  is  one  who  signs  his  name  on  the  back  of  the  note. 
Any  writing  upon  the  back  of  commercial  paper,  (usually  a  name)  is   called   an   in- 
dorsement. 

The  Face  of  a  note  is  the  sum  named  in  the  note. 

The  amount  of  a  note  is  the  face  plus  any  interest  that  may  be  due  on  the  note. 

The  Maturity  of  a  note  is  the  day  it  falls  due. 

When  the  due  date  falls  on  Sunday  or  a  legal  holiday,  the  note  matures  on  the  fol- 
lowing day. 

FORM  OP  PROMISSORY  NOTE 


Bills  Receivable,  is  a  term  applied  to  all  notes  and  written  promises 
which  we  hold  against  other  persons.  Bills  Payable,  applies  to  all  notes, 
etc.,  which  we  will  have  to  pay  when  due. 


JOURNALIZING  13 

Rule  IV.    When  you  receive  another  person's  note,  you  should   Dr.   Bills  Re- 
ceivable; and  when  you  dispose  of  that  note,  Cr.  Bills  Receivable. 

191.. 

Mar.  1.       Sold  Robert  Gardner  100  brls.  apples  @  $2.75,  $275.     Received 
in  payment  his  note. 
Dr.  Bills  Rec. 

"    2.       Bought  of  C.  J.  Miller  for  cash,  250  gal.  gasoline  @  lie,  $27.50. 

•'  3.  Sold  to  Henry  Anderson  for  cash,  Robert  Gardner's  note  re- 
received  on  the  first  instant,  $275. 

"  5.  Sold  to  James  H.  Hainline  on  account,  200  brls.  XX  flour  @ 
$4.50,  §900. 

' '  7.  Received  of  J.  P.  Shaw  his  note  at  60  days  to  apply  on  ac- 
count, $300. 

"  7.  Sold  to  Willis  Benson  200  bu.  potatoes  @  80c,  $160;  5  bu. 
clover  seed  @  $18,  S90.  Total  $250.  Received  in  payment 
his  note. 

"  8.  Bought  of  A.  W.  Dudley  80  bu.  oats  @  60c,  $18;  100  bu.  rye  @ 
80c,  $80.  Total  $128.  Gave  in  payment  A.  W.  McBride's 
note  $128. 

Rule  V.    When  you  issue  your  note,  you  should  Cr.  Bills   Payable;   and   when 
you  pay  or  redeem  your  note.  Dr.  Bills  Payable. 

"  8.  Bought  of  A.  W.  Winslow  100  yds.  broadcloth  at  $6,  $600. 
Gave  in  payment  my  note. 

"  9.  Borrowed  cash  of  Louis  Swanson  $200.  Gave  in  payment  my 
note  due  in  30  days. 

* '     10.     Received  of  J.  P.  Shaw  cash  in  payment  of  his  note,  $300. 

"  12.  Sold  William  C.  Russell  20  brls.  sugar  @  $9,  180;  10  boxes 
Graham  crackers  $2,  $20.  Total  $200.  Received  in  payment 
his  note,  due  in  30  days. 

"  12.  Sold  to  First  National  Bank,  Willis  Benson's  note,  $250,  for 
which  I  have  received  the  cash. 

14.  Bought  on  30  days  credit,  of  H.   AV.  Hinman   Mdse.    per   bill, 
$300. 

'*  15.  Bought  of  Wilson  &  Brown,  2  shares  I.  C.  Railroad  Stock  @ 
$100,  $200.     Gave  in  payment  William  C.  Russell's  note. 

15.  Paid  Union  Bank,  cash  for  my  note  given  to  C.  A.  Reed  $230, 
now  due. 


14  THEORY  OF  BOOKKEEPING 

191.. 

Mar.  16.     Borrowed  cash  of  Daniel  E.  Fiske  $500  on  my  note,  due  in  90 
days,  bearing  6%  interest. 
"    17.     Sold  W.  L.  Kellogg  on  account,    due  in  30  days,  60   bu.    oats, 
dc.  40c,  $24;  20  bu.  clover  seed  @  $20,  $400;  30  bu.  rye  @    85c, 
$25.50.     Total  $449.50. 

*'     17.     Received  of  H.  W.  Hinman  cash  to  apply  on  account,  $150. 

*'  19.  Paid  Merchant's  National  Bank  cash  for  my  note,  in  favor  of 
A.  W.  Winslow,  given  on  M:ar.  8,  $600. 

"  22.  Sold  David  Foss,  30  sacks  G.  sugar  275  lbs.  each  @  3c,  $247.50. 
Received  in  payment  Daniel  Haskin's  note  in  David  Foss' 
favor,  and  endorsed  by  Foss,  $247.50. 

"  23.  As  an  accommodation  to  Andrew  C.  Allen,  I  have  given  him 
my  note  due  in  30  days  bearing  six  per  cent,  interest  for  $400, 
in  exchange  for  his  note  due  in  like  amount,  time  and  rate. 

**  25.  Sold  to  Frank  G.  Wright,  2  shares  Illinois  Central  Railroad 
Stock  at  $1  lO,  $220.  Received  in  payment  100  brls.  Greening 
apples  at  $2.20,  $220. 

27.  Received  of  W.  L.  Kellogg  to  apply  on  account,  my  note  given 
to  A.  C.  Allen  on  the  23rd  inst. ,  which  he  has  endorsed  over 
to  Kellogg,  $400. 

28.  Redeemed  my  note  for  $600  given  to  Amos  Pettibone  by  pay- 
ing him  for  same  in  cash. 


"  30.  Bought  of  A.  G.  Haskins  100  brls.  XXX  flour  @  $5,  $500. 
Gave  in  payment  W.  G.  Clark's  note,  due  in  sixty  days  my 
favor,  $500. 

**  31*  Leroy  Hamilton  owes  me  $400  and  is  unable  to  pay.  He  offers 
me  his  note  due  in  30  days  bearing  6%  interest,  which  I  ac- 
cept. 

31.  Redeemed  my  note  for  $100  favor  J.  C.  Lewis  by  delivering  to 
him  50  bu.  potatoes  (^  60c,  $30;  80  bu.  oats  @  40c,  $32;  20 
boxes  Graham  crackers  @  $1.90,  $38.     Total  $100. 

Write  the  promissory  note  mentioned  in  the  transaction  of  March 
16th,  similar  to  the  form  given. 

Present  your  work  to  the  teacher  for  approval.  When  correct, 
copy  in  your  journal. 


JOURNALIZING 


15 


LESSON  IV 
SUNDRY  ITEMS 


An  Item  in  bookkeeping,  is  a  distinct  and  separate  part  of  an  entry. 

Sundries  is  a  term  meaning  several  items. 

It  was  Jormerly  a  custom,  where  an  entry  contained  several  debits  or  several  credits, 
to  head  such  entry  with  the  word  Sundries.  (Sunds.)  The  use  of  the  word  is  now  being 
discarded  by  good  bookkeepers,  and  will  be  omitted  here. 


Rule  VI. 


191.. 
Apr.  2. 


"  3. 

"  4. 

"  5. 

"  6. 


When  there  are  several  debits  or  several  credits  in  a  transaction, 
write  first  the  debit  items  in  the  debit  position,  then  the  credit 
items  in  the  credit  position,  using  a  separate  line  for  each  item. 

Sold  Chas.  G.  Hunter,  5   shares   Bank   Stock   @   $100,    $500. 
Received  in  payment,  cash  $250;  his  note  at  30  days  for  $250. 


J.  €7  J... 

Apr. 

2 

Cash 
Bills  Bee. 

Bank  Stock 

250 

250 

500 

Received  of  John  Smith  on  account,  cash  $50;  10  brls.  flour  @ 
$4.50,  $45;  his  note  at  30  days  $105.     Total  $200. 

Bought  of  A.  N.  Davidson,  20  brls.  sugar  @  $12,  $240;  5  shares 
Peoples  Gas  Stock  @  $100,  $500.  Gave  in  payment  my  note 
at  60  days,  $740. 

Bought  of  Carroll  Whitaker,  a  bill  of  merchandise  amounting 
to  $320.  Gave  in  payment,  20  brls.  flour  @  $5,  $100;  cash 
$100,  1  share  Peoples  Gas  Stock  $120.     Total  $320. 

Bought  of  Edgar  A.  Snow,  4  lots  in  Edgewater  @  $1250, 
$5000.  Gave  in  payment,  cash  $2000;  my  notes  at  one,  two 
and  three  years  for  $1000  each. 

Debit  Edgewater  Lots.     Enter  the  notes  separately. 


16 

191.. 
Apr.  7. 


THEORY  OF  BOOKKEEPING 


Paid  John  R.  Dobbins  on  account,   cash  $180;  my  note  due   in 
30  days  $120.     Total  $300. 


191.. 


Apr. 

7 

John  R.  Dobbins 

Cash 
Bills  Pay. 

300 

180 
120 

9.  Received  cash  from  Thomas  Kennedy  for  his  note  now  due 
$1(X);  also  to  apply  on  his  account  $50.     Total  $150. 

10.  Sold  Erwin  &  Welch  5  shares  City  Bank  Stock,  @  $100,  $500; 
10  shares  Edison  Light  Stock  @  $90,  $900.  Total  $1400.  Re- 
ceived in  payment,  cash  $1000,  balance  on  account. 


191.. 

Apr. 

10 

Cash 

Erwin  ^(;  Welch 

City  Bank  Stock 
Edison  Light  Stock 

iooo 

JfOO 

500 
900 

11.  Bought  of  David  McDonald,  for  cash,  300  bu.  Belle  Flower 
apples  @  $1.50,  $450. 

13.  Sold  John  C.  Hamilton  50  brls.  N.  O.  Molasses  @  $8,  $400. 
Received  in  payment,  cash  $200;  his  note  at  30  days  $100, 
balance  on  account. 

16.  Bought  of  Peter  Elston  property  adjoining  our  store  known 
as  No.  364  Broadway,  for  $8000;  store  fixtures  $500;  goods  on 
the  shelves  $1500.  Total  $10000.  Gave  in  payment,  cash 
$5000;  2  lots  in  Edgewater  @  $1500,  $3000;  10  Chicago  City 
Bonds  @  $100,  $1000;  my  note  at  6  mos.  for  balance  $1000. 

17.  Received  cash  of  Erwin  &  Welch  on  account  $400. 


(( 

19. 

•  ( 

20. 

(( 

24. 

<( 

25. 

JOURNALIZING  17 

191.. 

Apr.  17.     Paid  T.  W.  Miller  on  account,    John   C.   Hamilton's  note   re- 
ceived on  the  13th  inst.,  $100. 

18.  Paid  my  note  in  favor  Loring  Provine  now  due,  amounting  to 
$600,  by  giving  him  cash  $200;  J.  L.  Bailey's  note  $200;  my 
note  at  30  days  $200. 

19.  Bought  of  Henry  Alston  on  account,  30  bags  Rio  coffee  80  lbs. 
each  @  18c,  $432. 

Received  of  Geo.  F.  Douglas  on  account,  cash  $200;  his  note  at 
one  month  with  six  per  cent,  interest,  $150.     Total  $350. 

Paid  cask  to  Wilson  &  Hayward  on  account,  $135. 

Sold  Parker  &  Dunning  50  brls.  C  sugar  @  $12,  $600.  Received 
in  payment  cash  $300;  their  note  at  60  days  for  $300. 

Borrowed  cash  of  First  National  Bank  on  my  note  at  90   days, 
$1000. 

26.  Sold  A.  J.  Allison  2  lots  in  Edgewater  @  $1500,  $3000;  10 
shares  City  Bank  Stock  @  $100,  $1000.  Total  $4000.  Re- 
ceived in  payment  cash  $2000;  Walter  C.  Nelson's  note,  Alli- 
son's favor,  and  by  him  endorsed,  $1000;  A.  J.  Allison's  own 
note  due  in  one  month  $1000. 

28.  Paid  cash  to  Thomas  Hamer  on  account,  $140. 

29.  Paid  C.  L.  Newton  on  account,  cash  $60;  my  note  due  in  30 
days,  $140.     Total  $200. 

30.  Sold  to  Geo.  E.  Davis,  2  shares  People's  Gas  Stock  @  $110, 
$220;  50  brls.  XX  flour  @  $6,  $300.  Total  $520.  Received  in 
payment,  cash  $220;  my  note,  Davis'  favor  $200;  his  note  for 
balance,  $100. 

30.  Bought  of  Desmond  &  Co.,  100  brls.  N.  Y.  salt  @  $1.60,  $160. 
Gave  in  payment,  cash  $100,  balance- on  account. 

30.  Gave  Thomas  Hamer  in  full  of  account,  my  note  due  in  30 
days,  $68.40. 


(( 


(( 


18  THEORY  OP  BOOKKEEPING 


LESSON   V 
DRAFTS  AND  BILLS  OF  EXCHANGE 

A  Draft  is  a  written  order  drawn  by  one  person,  upon  another,  re- 
questing that  person  to  pay  to  a  third,  a  specified  sum  of  money. 

A  Bill  of  Exchange  is  similar  to  a  draft.  The  name  is  commonly  ap- 
plied to  drafts  drawn  on  persons  residing  in  a  foreign  country,  and  to 
avoid  loss  in  forwarding,  they  are  usually  issued  in  duplicate. 

The  Drawer  of  a  draft  is  the  person  who  signs  it. 

The  Drawee  is  the  person  drawn  on,  or  who  is  requested  to  pay. 

The  Payee  is  the  person  to  whom  payment  is  to  be  made. 

Instead  of  collecting  the  draft  himself  the  payee  may  endorse  it,  by  writing  his 
name  across  the  back,  and  then  transfer  it  to  some  other  person  who  would  be  author- 
ized to  present  and  collect.  One  to  whom  commercial  paper  is  endorsed  in  this  way  is 
called  an  endorsee. 

To  Honor  a  Draft  is  to  pay  it,  or  signify  in  writing  your  willingness 
to  pay  it  when  it  is  presented. 

A  draft  is  said  to  be  "dishonored"  when  payment  is  refused.  The  holder  may  then 
return  the  draft  to  the  person  from  whom  he  received  it. 

FORM  OF  DRAFT 


The  Face  of  a  draft  is  the  sum  for  which  it  is  drawn. 


JOURNALIZING  19 

Rule  VII.    When  you  draw  a  draft  or  order  on  a  person,  credit  that  person. 

191.. 

May  1.       Bought  of  C.  E.  Mason,  a  bill   of   merchandise   amounting   to 
$85.     Gave  in  payment  my  draft  on  G.  W.  Long. 

"    2.       Sold  Enos  Barton  for  cash,  my  draft  on  T.  G.  Baker  $100. 

**  4  Bought  of  Sprague,  Warner  &  Co.,  6  half -chests  Japan  tea, 
75  lbs.  each  @  26c,  $117.  Gave  in  payment  my  draft  on  Fuller 
&  Fuller. 

"  5.  Sold  for  cash  to  John  Russell,  60  cases  eggs  12  doz.  each  @ 
18c,  $129.60. 

"    6.      Bought  of  E.  C.  Wood  on  account,  150  bu.  potatoes  @  60c,  $90. 

"  6.  Sold  to  W.  G.  Ender,  my  draft  on  J.  C.  Kennedy  for  $300. 
Received  in  payment  J.  E.  Cornell's  note  for  $200;  cash  for 
balance  $100. 

"  7.  Bought  of  J.  C.  Craft,  10  shares  Continental  Bank  Stock  @ 
$243,  $2430.  Gave  in  payment  cash  $1430;  my  order  on  E.  B. 
Hanson  for  $1000. 

*'    8.       Sold  to  F.  C.  Bell  for  cash,  my  draft  on  W.  L.  Hanson  $350. 

'*  9.  Paid  my  note,  favor  A.  G.  Bonsall  now  due,  amounting  to  $300, 
by  giving  him  an  order  on  H.  C.  Olin  for  $200,  cash  for  bal- 
ance $100. 

Rule  VIII.    When  a  person  draws  a  bill  of  exchange  or  draft   on  you,   which 
you  honor,  debit  that  person. 

*  "    11.     Paid  cash  cash  for  Louis  Brandt's  order  on  me,  $100. 

*'  11.  Sold  David  Cameron  30  brls.  Minnesota  flour  @  $5.50,  $165. 
Received  in  payment  Frank  Jones'  order  on  me,  drawn  in  fa- 
vor of  Cameron. 

•'  13.  Sold  to  William  Foster  500  bu.  yellow  corn  @  60c,  $300;  150 
bu.  spring  wheat  @  80c,  $120.  Total  $420.  Received  in  pay- 
ment J.  H.  Weston's  order  on  me  for  $250;  William  Foster's 
note  at  30  days,  $150;  cash  for  balance. 

**  15.  Bought  of  Dwight  Jackson  50  boxes  California  oranges  @  $3, 
$150;  100  boxes  grapes  $2,  200.  Total  $350.  Gave  in  payment 
cash  $200;  my  draft  on  Henry  Wilkins  $150, 

"  18.  Received  of  A.  W.  Dudley  on  account  his  note,  $200;  cash  $100. 
Total  $300. 


20  THEORY  OF  BOOKKEEPING 

191.. 

May  18.     Paid  cash  for  James  Berry's  draft  on  me,  favor   R.  C.    Wood- 
worth,  $50. 

19.     Received  of  Allen  &  Co.  on  account,  William  Drake's  draft  on 
me,  Allen  &  Go's  favor,  $100. 

*'  20.  Sold  W.  M.  Bosworth  on  account,  lObrls.  Minnesota  flour  @ 
$5.25,  $52.50;  5  half-chests  Japan  tea,  75  lbs.  each  @  30c, 
$112.50;  20  boxes  California  oranges  @  $2.80,  $56.     Total  $221. 

**  22.  Bought  on  my  note  at  60  days,  of  Adam  Douglas  500  bu.  No. 
1.  corn  @  60c,  $300. 

**  24.  Paid  E.  C.  Randall  on  account,  my  draft  on  Hamilton,  Wilson 
&  Co.,  $250. 

**  24.  Received  of  C.  J.  Mitchell  on  account,  cash  $50;  his  note  at  30 
days  $100.     Total  $150. 

"  25.  Sold  William  D.  Barr  6  Chicago  City  Bonds  @  $104.50,  $627. 
Received  in  payment  cash  $500;  his  note  at  30  days  for  bal- 
ance. 

''26.  I  owe  Donald  Goodspeed  $800.  He  has  drawn  at  sight  on  me 
for  that  amount,  favor  First  National  Bank,  and  I  1:  ave  this 
day  paid  cash  to  the  bank  for  same. 

*•  27.  Received  cash  of  Henry  Spencer  for  my  draft  on  J.  D.  Wil- 
liams, $140. 

*'  29.  Sold  to  J.  L.  Thomas  40  cases  eggs,  12  doz.  each  @  20c,  $96; 
50  bu.  potatoes  @  60c,  $30.  Total  $126.  Received  in  payment 
A.  C.  Becken's  order  on  me,  favor  J.  L.  Thomas  for  $75.  Bal- 
ance  on  account,  $51. 


JOURNALIZING 


21 


LESSON  VI 


DRAFTS  AND  BILLS  OF  EXCHANGE  (Continued) 


A  Sight  Draft  is  one  which  is  payable  at  sight,  or  on  presentation. 

A  Time  Draft  is  one  which  is  payable  a  specified  time  "after  date'* 
or  "after  sight." 

Acceptance.  When  a  time  draft  is  presented  to  the  drawee,  if  he  is 
willing  to  pay  it  at  maturity,  he  signifies  that  fact  by  writing  the  word 
"accepted"  together  with  the  date  and  his  signature  across  the  face  of 
the  draft.     Thereafter  the  paper  is  called  an  "Acceptance." 

An  acceptance  is  the  same  as  the  acceptor's  promissory  note.  The  acceptance 
sliould  be  written  in  red  ink. 


AN  ACCEPTANCE 


v^^ 


.AQ/^^ 


^^^^ii^C.<i^<&^^^2^^^^ 


Rule  IX.    Whenever  you  accept  a  draft  or  bill  of  exchange,  credit   Bills   Pay- 
able, and  when  you  pay  your  acceptance,  debit  Bills  Payable. 

191.. 

June  1.      Accepted  James  Duncan's  draft  on  me  due  at  8  days  sight  for 
$400,  favor  A.  E.  Banning. 

*'     2.      Bought  of  Pettibone  &  Co.,  on  my  acceptance,  a  bill  of  goods 
amounting  to  $129.50. 


22  THEORY  OF  BOOKKEEPING 

191.. 

June  3.       Sold  to  R.  S.  Peale  50  brls.  St.  Louis  flour  @  $5.60,  $280.  Re- 
ceived inpayment  cash  $180;  balance  on  account. 

"  5.  Bought  of  Brown  &  Gorham  30  brls.  white  fish  @  $6,  180;  20 
pails  mackerel  @  $2,  $40.  Total  $220.  Gave  in  payment  cash 
$100;  order  on  Simon  Wilson  for  $120. 

"  6.  Accepted  John  Parker's  draft  on  me  at  10  days  sight,  favor 
Henry  Armstrong  for  $245. 

"  8.  Paid  cash  for  my  acceptance  given  A.  E.  Banning  on  the  first 
Instant,  $400. 

"  9.  Sold  A.  W.  Perkins  25  brls.  W.  W.  flour  @  $4,  $100;  80  bu. 
oats  @  20c,  $16;  27  bu.  corn  @  50c,  $13.50.  Total  $129.50. 
Received  in  payment  my  acceptance  given  to  Pettibone  &  Co. 
on  the  2nd  inst. 

"  10.  Sold  Henry  S.  Kirk  on  his  note,  my  sight  draft  on  F.  W.  Jen- 
nings for  $325.40. 

Rule  X.  Whenever  you  receive  or  purchase  a  draft  or  order  drawn  on  an- 
other person,  debit  Bills  Receivable,  and  when  you  dispose  of  it, 
credit  Bills  Receivable. 

"  12.  Bought  of  A.  J.  Cole  for  cash,  his  draft  on  R.  H.  Warner  for 
$300. 

•*  13.  Bought  of  J.  A.  Stephens  his  draft  at  sight,  on  A.  M.  Root 
for  $250.     Gave  in  payment  cash  $150;  my  note  at  30  days  $100. 

"  15  Sold  S.  R.  Wells  8  shares  C.  B.  &  Q.  railroad  stock  @  $100, 
$800.  Received  inpayment,  cash  $500;  D.  A.  Nesbits'  draft  at 
10  days  sight  on  Chas.  Monroe  and  by  him  accepted  for  $300. 

"  17.  Bought  of  C.  A.  Warren,  600  bu.  yellow  corn  at  50c  $300. 
Gave  in  payment  the  draft  we  received  of  A.  J.  Cole  on  the 
on  the  12th  inst.  $300. 

"  19.  Received  cash  of  A.  M.  Root  for  J.  A.  Stephens'  draft  on  him 
at  sight,  $250. 

"  20.  Received  of  D.  R.  Forgan  on  account,  the  draft  which  I  ac- 
cepted drawn  by  John  Parker,  in  favor  of  Henry  Armstrong, 

$245. 

*'  22.  I  owe  H.  W.  Dixon  $200  on  account.  In  payment  I  have  given 
him  my  draft  at  5  days  sight  on  Arthur  W.  Burdick,  $200. 


( ( 


JOURNALIZING  23 

191.. 

June  24.     Sold  Henry  Nelson  on  his  30  days  acceptance,  200  bu.    yellow 
corn  @  40c,  $80. 

25.  Sold  to  F.  W.  Coleman  on  account,  my  draft  at  sight  on  E.  C. 
Winters,  $100. 

26.  Received  of  Henry  Anderson  on  account,  his  note  $240;  cash 
$60.     Total  $300. 

27.  Sold  to  H.  C.  Skinner  200  bu.  yellow  corn  @  60c,  $120;  250 
bu.  spring  wheat  @  80c,  $200.  Total  $320.  Received  in  pay- 
ment F.  C.  Duncan's  order  on  me,  $200;  a  note  signed  by  Wells 
Bros,  and  endorsed  by  F.  C.  Duncan  due  in  60  days  for  $120. 

27.  Sold  H.  P.  Carroll,  5  shares  Union  Bank  Stock  @  $110,  $550; 
4  shares  Commonwealth  Edison  Stock  @  $112i,  $450.  Total 
$1000.  Received  in  payment  cash  $600;  G.  W.  Thompson's 
draft  on  me  at  sight,  $400. 

28.  Boughtof  Meyer  &  Co.,  200  brls.  E.  R.  potatoes  @  $3.40, 
$680.     Gave  in  payment  cash  $500,  balance  on  account. 

29.  Paid  Thomas  Kennedy  on  account,  cash  $125. 

29.  Sold  J.  C.  Goven  5  shares  I.  C.  Railroad  Stock  @  $105,  $525. 
Received  in  payment  his  note  due  in  30  days,  bearing  6  per 
cent,  interest,  $525. 

30.  Bought  of  Davis  &  Son,  100  brls.  St.  Louis  flour  @  $4,  $400; 
20  brls.  G.  sugar,  $12,  $240.  2  shares  People's  Gas  Stock  @ 
$100,  $200.  Total  $840.  Gave  in  payment  my  draft  at  sight 
on  C.  V.  Chandler,  $200;  cash  $200;  Henry  Nelson's  accep- 
tance $80;  accepted  their  draft  on  me  at  30  days  sight,  favor 
J.  Reed  for  balance,  $360. 

30.  Bought  on  my  acceptance  at  30  days,  4  shares  Automatic 
Telephone  Stock  @  $100,  $400. 


24  THEORY  OF  BOOKKEEPING 


LESSON  VII 

INTEREST 

Interest  is  that  which  represents  the  use  of  money. 

When  we  say  we  paid  interest  on  our  note,  we  mean  that  we  paid  cash  for   the  in- 
terest. 

Rule  XI.     Debit  interest  when  it  costs  you,  and  credit  it  when  it  produces  you 
value. 

191.. 

July  1.       Paid  cash  to  J.  Jones  for  interest  on  my  note,  $8.40. 
Debit  Interest. 

"    2.       Received  cash  from  William  Jennings  for  interest  on  his  note, 

$18. 

"  3.  Sold  A.  F.  Stacy  on  his  note,  260  bu.  corn  @  60c,  $156,  said 
note  to  bear  interest  at  6%  and  fall  due  in  30  days. 

**  4.  Paid  Edgar  A.  Snow  &  Co.  cash  for  my  note  due  today.  Face 
of  note  $1000,  interest  to  date  $30,     Total  $1030. 

**    6.       Paid  cash  to  J.  Wilson  for  interest  on  my  note  $10.20. 

7.       Paid  cash  to  Union  Bank  for  my  note  due,  $300,    and   interest 
thereon  $7.50.     Total  $307.50. 

**    8.       Bought  of  C.  D.  Hamlin  a  bill   of  merchandise   amounting   to 
$425.     Gave  in  payment,  Hiram   Russell's  note,  $400;   interest 
accrued  on  the  note,  $25.     Total  $425. 
Note. — Accrued  interest  is  that  which  has  been  earned,  but  is  not  yet  due. 

"  9.  Collected  in  cash  the  interest  due  on  the  note  which  I  hold 
against  David  Howell,  $32.65. 

*'  10.  Received  cash  from  A.  S.  Gordon  as  a  part  payment  on  his 
note  and  interest  now  due:  to  apply  on  note  $250;  interest  $8.30. 
Total  $258.30. 

*'  10.  The  note  which  I  gave  to  Wallace  Harris  amounting  to  $500  is 
now  due,  with  interest,  $5.  I  have  paid  for  same  with  a  new 
note  at  60  days  for  $505. 


191. 

July  13, 

( ( 

14. 

( ( 

14. 

(( 

16. 

{( 

17. 

(( 

18. 

(( 


( ( 


JOURNALIZING  25 


Paid  cash  for  interest  on  my  note,  due  today,  amounting  to 
$18.30. 

Received  of  A.  L.  Fisher  on  account,  his  note  at  30  days  for 
$300,  cash  $200. 

Sold  B.  M.  Wilson  10  brls.  flour  @  $6,  $60;  5  brls.  sugar  % 
$15,  $75;  8  pockets  Monsoon  brand  rice  @  $6,  $48.  Total  $183. 
Received  in  payment  his  draft  on  James  H.  Walker  for  $183. 

Sold  Warren  Leland  for  cash,  Henry  Ellis'  note  for  $300,  in- 
terest accrued  on  same  $4.     Total  $304, 

Paid  cash  for  my  acceptance,  favor  Daniel  E.  Porter  $235. 

I  have  drawn  at  sight  on  George  C.  Hanson  for  $320,  in  favor 
of  J.  P.  Shaw,  and  delivered  the  draft  to  Shaw  on  account. 

19.  Bought  of  C.  W.  Hamilton  5  shares  C.  B.  &  Q.  Railroad  Stock 
@  $108,  $540;  10  shares  Commonwealth  Edison  Stock  @  $110, 
$1100.  Total  $1640.  Gave  in  payment  cash,  $1000;  my  draft 
on  William  C.  Lawson  $500;  my  note  for  balance,  $140. 

20.  Paid  my  note  favor  C.  A.  Wilson  $800  and  interest  thereon  $12, 
by  giving  James  Berry's  note  $400;  interest  accrued  thereon 
$4;  my  note  for  balance,  $408. 

21.  Sold  E.  C.  Reed  500  bu.  winter  wheat  @  80c,  $400.  Received 
in  payment  my  note  in  favor  of  Henry  Otis,  endorsed  by  E.  C. 
Reed,  $400. 

21.  Received  cash  of  A.  D.  Foster  in  payment  of  his  note  and  in- 
terest thereon  to  date.  Face  of  note  $250,  interest  at  6%,  $1.25. 
Total  $251.25. 

22.  Sold  Samuel  Winslow  on  account,  200  bu.  spring  wheat  @  85c, 
$170. 

23.  Brady  &  Co.  have  drawn  on  me  at  30  days  sight,  favor  J.  C. 
Kingsbury,  and  I  have  accepted  the  draft,  $600. 

24.  Accepted  Arthur  Coultas'  draft  on  me  at  5  days  sight,  $80. 

25.  Received  cash  from  E.  B.  Jennings  for  interest  on  his  note, 
$38.60. 

27.  Paid  my  note  favor  Brown  &  Hathway  and  interest  thereon. 
Face  of  note  $350,  interest  $3.50.  Gave  in  payment  cash  $200; 
new  note  at  30  days  for  balance,  $153.50. 


26  THEORY  OP  BOOKKEEPING 


LESSON  VIII 

SHIPMENTS  OR  CONSIGNMENTS 

A  Commission  Merchant  is  an  agent  who  sells  goods  for  another, 
charging  a  percentage  on  the  sale  for  his  compensation. 

The  object  of  shipping  goods  away  on  consignment,  may  be  to  take  advantage  of 
better  market  conditions  in  the  other  locality,  or  find  a  wider  market  for  the  goods. 
Live  stock,  grain,  fruit  and  most  kinds  of  produce  are  sold  by  commission  merchants,  or 
on  consignment. 

A  Shipment  or  Consignment  is  an  invoice  of  goods  sent  to  a  com- 
mission merchant  for  sale  for  account  of  the  shipper. 

"For  account  of  the  shipper"  means  for  his  profit  or  benefit,  or  at  his  risk  or  loss. 
The  property  still  belongs  to  the  shipper. 

Consignor.    The  shipper  is  called  the  consignor. 

Consignee.  The  consignee  is  the  person  to  whom  the  goods  are 
shipped. 

Advances.  The  commission  merchant  will  advance  a  reasonable 
proportion  of  the  value  of  the  consignment  in  money  to  the  shipper, 
pending  the  sale  of  the  consignment. 

These  advances  are  usually  made  by  the  consignor  drawing  a  draft  on  the  consignee 
for  the  advance  agreed  upon. 

Bill  of  Lading.  This  is  in  the  nature  of  a  receipt  issued  by  the  rail- 
road or  other  transportation  company,  for  goods  shipped. 

In  the  case  of  drafts  drawn  for  advances  against  shipments,  the  Bills  of  Lading 
usually  are  attached  to  the  drafts. 

Net  Proceeds,  is  the  balance  left  after  deducting  the  agent's  com- 
mission and  other  expenses  from  the  total  sale. 

The  shipper  does  not  usually  prepay  the  freight  on  the  shipment  but  allows  the 
commission  merchant  to  pay  it  upon  receipt  of  the  shipment,  this  to  be  deducted  along 
with  other  expenses  and  charges  in  the  final  settlement. 

Account  Sales.  An  account  sale  is  a  statement  rendered  to  the  ship- 
per by  the  commission  merchant,  showing  amount  of  sale,  charges  and 
expenses  deducted,  and  the  net  proceeds. 

When  the  shipment  is  sold,  the  commission  merchant  may  remit  cash  to  the  con- 
signor for  the  net  proceeds — less  advances  if  any,  along  with  the  account  sales,  or  he 
may  place  the  net  proceeds  to  the  consignors  credit,  to  be  paid  at  some  future  time. 


JOURNALIZING 
FORM  OF  ACCOUNT  SALES 

Ho.^^^/^ CHICAGO, 

ACCOUNT  SALES  BY 

WILSON    BROS. 

123  S.  WATER  STREET 

For  Ace't  and  Risk  of  C^^Y    ^  ........r-k:^^  , 

Car  No (^J^.f^. 


27 


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■  ^t>s^,.^i^  >^^^^^i^L^:z,^£.e/'-'ai€^                   ^ 

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CHARGES:      Freight 
.Cartage 
Storage 

/ 

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c^/ 

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Insurance 

Commission 
F.  *  O.  E.          Net  Proceed, 

c^ 

/^ 

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ca^ 

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^/ 

Rule  XII.     When  you  ship  away  goods  for  sale  on  your  account  and  risk,  make 
Shipment  to  the  Person  and  Place  Dr. 

Rule  XIII.  When  you  receive  an  Account  Sales,  credit  Shipment  to  the 
Person  and  Place,  for  the  amount  of  the  net  proceeds  and  if  the 
commission  merchant  does  not  remit  the  net  proceeds,  Dr.  him. 


191.. 
Aug.  1. 


Shipped  to  C.  A.  Watson  &  Co.,  Chicago,  for  sale  on   my   ac- 
count, 200  brls.  apples  @  $2,  $400. 
Shipment  C.  A,  Watson  &  Co.,  Chicago.,  Dr. 


28  THEORY  OF  BOOKKEEPING 

191.. 

Aug.  3.  Shipped  by  C.  M.  &  St.  Paul  Ry.  to  F.  F.  Bosworth  &  Co., 
Milwaukee,  for  sale  on  my  account,  130  sacks  potatoes  @ 
$1.50,  $195. 

*'  4.  Shipped  to  Ledward,  Bibby  &  Co.,  Liverpool,  1400  bags 
sugar  each  320  lbs.  @  2ic,  $11200,  to  be  sold  for  my  account 
and  risk. 

' '  6.  Received  cash  of  First  National  Bank  for  my  draft  on  Led- 
ward Bibby  &  Co.,  with  bill  of  lading  attached,  $6000. 

**  7.  Received  of  C.  A.  Watson  &  Co.,  Chicago,  an  account  sales  of 
my  consignment  of  apples,  showing  net  proceeds  $513.20, 
which  amount  they  have  placed  to  my  credit. 

"  9.  Bought  on  account  of  Carroll  &  Saunders  1000  bu.  W.  W. 
wheat  @  72ic,  $725. 

"  10.  Shipped  to  A.  M.  Stockwell&  Co.,  Buffalo,  N.  Y.,  the  1000 
bu.  wheat  purchased  of  Carroll  &  Saunders,  to  be  sold  on  my 
account,  $800. 

•'  11.  Received  of  F.  F.  Bosworth  &  Co.,  Milwaukee,  an  account 
sales  of  my  consignment  of  potatoes,  together  with  a  check 
for  the  net  proceeds,  amounting  to  $269.40. 

"  14.  Paid  Carroll  &  Saunders  on  account,  my  draft  at  10  days  sight 
on  A.  M.  Stockwell  &Co.,  Buffalo,  for  $500;  cash  for  balance, 

$225. 

'•  14.  Shipped  to  J.  C.  Welling  &  Co.,  Chicago,  2000  bu.  yellow  corn 
@  50c,  $1000,  to  be  sold  for  my  account  and  risk.  Prepaid 
freight  in  cash  to  Chicago  $45;  also  paid  cash  $12  for  $750 
policy  in  the  Traders'  Insurance  Co.,  covering  this  shipment. 
Total  $1057. 

''  18.  Shipped  by  C.  M.  &  S.  P.  Ry.  to  F.  F.  Bosworth  &  Co.,  Mil- 
waukee, for  sale  on  my  account,  500  sacks  potatoes  @  $1.55, 
$775.     Cartage  paid  in  cash  $25.     Total  $800. 


20.     Bought  of  A.  M.  Hootm-.n,  200  baskets  peaches  @  40c, 

50  crates  Nutmeg  melons  @  $1.25,  $62.50;  200  brls.  Greening 
apples  @  $1.35,  $270.  Total  $412.50.  Gave  in  payment  my 
note  at  30  days  for  $200;  balance  on  account. 

26.  Received  from  A.  M.  Stockwell  &  Co.,  Buffalo,  N.  Y.,  an  ac- 
count sales  of  my  shipment  of  1000  bu.  wheat  showing  net 
proceeds  amounting  to  $768.40,  which  they  owe  me  on  account. 


JOURNALIZING  29 

191.. 

*'  27.  I  am  advised  that  owing  to  a  strike  on  the  C.  M.  &  St.  Paul 
Ry.  my  shipment  of  potatoes  consigned  to  F.  F.  Bosworth  & 
Co.,  Milwaukee,  reached  there  badly  damaged  &nd  practically 
worthless.  I  have  wired  Bosworth  &  Co.  to  refuse  to  receive 
the  shipment.  I  will  charge  the  railroad  company  with  the 
value  of  the  shipment,  $800  and  endeavor  to  collect  from  it. 

"  29.  My  shipment  to  J.  C.  Welling  &  Co.,  Chicago,  has  been  de- 
stroyed by  fire  in  transit,  and  I  have  charged  same  to  Trader's 
Insurance  Co. ,  to  the  extent  of  the  policy  $750. 


LESSON  IX 
DISCOUNT  AND  EXCHANGE 


Discount  is  a  sum  deducted  from  the  face  value  of  commercial  paper 
as  a  compensation  for  its  payment  or  transfer. 

Discount  is  a  "species"  of  interest,  since  it  is  based  upon  the  use  of  the  money  for 
the  time  until  it  will  be  due. 

Exchange  is  a  charge  usually  made  by  banks  for  collecting  checks 
and  drafts  on  banks  or  persons  in  other  cities. 

This  does  not  refer  to  the  "rate  of  exchange"  between  countries,  whereby  foreign 
drafts  sometimes  sell  above  or  below  par.  This  "Foreign  Exchange"  usually  relates  to 
transactions  between  banks  only,  and  will  not  interest  the  student  at  this  point. 

Rule  XIV.  When  you  pay  less  for  a  draft  or  note,  than  its  face,  Cr.  Discount 
When  you  receive  less  for  a  draft  or  note  than  its  face,  Dr.  Dis- 
count. 

Rule  XV.     When  you  pay  a  fee  for  collecting  checks  or   drafts   or   remitting 
money,  Dr.  Exchange.     When  you  receive  such  a  fee,  Cr.  Exchange. 

191.. 

Sept.  1.  Discounted  at  the  bank  Henry  C.  Allen's  note  for  $500.  Dis- 
count $5,  received  cash  $495. 


30  THEORY  OF  BOOKKEEPING 

191.. 

Sept.  2.       Paid  my  note  favor  J.  M.  Brown  before   due.      Face   of  note 
$320,  discount  allowed  $1.80.     Paid  cash  $318.20. 

"  3.  Received  of  J.  M.  Pile,  Omaha,  Neb. ,  his  personal  check  on 
an  Omaha  bank  in  settlement  of  his  account,  $186. 

"4.  In  depositing  J.  M.  Piles  check  the  bank  charged  me  $1  ex- 
change, which  I  have  paid. 

As  a  matter  of  right  Pile  should  pay  this  exchange,  but   as   he   is   a   good 
customer  and  a  prompt  payer,  I  will  charge  it  to  exchange. 

"  6.  The  bank  has  this  day  collected  my  draft  of  $560  against 
Marion  Davenport,  of  Duluth,  exchange  $1.40,  net  proceeds 
received  in  cash,  $558.60 

**  7.  Deposited  in  bank  today,  various  checks  on  out-of-town  banks, 
on  which  the  bank  charges  me  exchange  (which  I  have  paid) 
$1.15. 

**  10.  Drew  on  J.  W.  Webster  at  10  days  sight  for  the  balance  due 
me,  $480,  and  discounted  the  draft  at  Traders'  Bank.  Dis- 
count 80c;  cash  received  $479.20. 

**  10.  Cashed  a  check  for  a  friend,  on  an  out-of-town  bank,  on 
which  he  paid  me  25c  exchange. 

**  15.  Exchanged  notes  with  A.  C,  Becken  for  our  mutual  accom- 
modation, each  drawn  at  30  days  for  $900. 

*'  16.  Discounted  at  Merchants  Bank,  A.  C.  Becken 's  note  for  $900. 
Discount  $4. 50.     Cash  received  $895 .  50. 

*'  17.  Paid  W.  M.  Hoyt  &  Co.  cash  for  my  note  before  maturity. 
Face  of  note  $650,  discount  allowed  $8.40,  cash  paid  $641.60. 

**     18.     Accepted  F.  C.  Wilson's  draft  on  me  at  30  days  sight  for  $265. 

*'  20.  The  bank  has  collected  my  draft  of  $120  against  Henry  C. 
Moore,  Indianapolis.'     Exchange  50c.     Received  cash  $119.50. 

"  21.  Bought  of  J.  E.  Hamilton  for  cash,  a  note  made  by  Louis 
Sulzman  in  Hamilton's  favor,  and  by  him  endorsed.  Face  of 
note  $600,  discount  allowed  $10,  cash  paid  $590. 

"     24.     Paid  S.  M.  Manning  on  account,  cash  $135. 

**  28.  Sold  to  Geo.  A.  Wilmot  40  sacks  sugar  @  $6.25,  $250.  Re- 
ceived in  payment  their  draft  at  sight  on  Fuller  &  Co.,  Mil- 
waukee, $100,  balance  on  account. 

**  31.  The  bank  has  collected  the  draft  on  Fuller  &  Co. ,  Milwaukee, 
$100,  deducting  exchange  50c.     Received  cash  $99.50. 


JOURNALIZING  31 


LESSON  X 

EXPENSE  AND  PROFIT  AND  LOSS 

Expense  is  a  term  applied  to  all   expenditures  for  carrying  on  the 
business,  such  as  rent,  fuel,  clerk  hire,  repairs,  etc. 

Profit  and  Loss.    Under  this  title  we  include  all  direct  or   immediate 
gains  or  losses  to  the  business,  such  as  goods  stolen  or  destroyed  by  fire. 

Rule  XVI.     Debit  expense  when  it  costs  you  and  credit  it  when   it   produces 
you. 

Rule  XVII.     Debit  Profit  and  Loss  for   all   immediate   losses   and  credit   it 
for  all  immediate  gains. 

If  an  article  which  has  been  charged  to  Expense  or  Profit  and  Loss   is   afterwards 
sold,  that  account  should  then  be  credited  for  the  amount  of  the  sale. 

191.. 

Oct.  1.       Bought  for  cash,  5  tons  of  coal  for  store  @  $7.50,  $37.50. 

3.       Paid  John  Nelson,  clerk,  for  his  services  past   month,   $60   in 
cash. 

5.  Bought  of  Jackson  &  Co.  a  new  set  of  books  for  the  business, 
for  cash  $38.75. 

6.  Paid  cash  for  postage  stamps,  $3. 

8.  James  W.  Austin,  who  owes  me  a  bill  of  $19.50,  has  failed  and 
this  amount  is  considered  a  total  loss. 

9.  Paid  cash  for  rent  of  store  for  current  month,  $125. 

10.  Paid  Peoples'  Gas  Co.  cash  for  gas  bill  for  past  month,    $9.30. 

12.  We  find  that  in  the  course  of  business  today  we  took  in   a   $10 
counterfeit  bill.     We  do  not  know  from  whom  it  was  received. 

13.  Paid  Peter  Weisman,  drayman,  for  services  to  date,  $40. 

14.  Our  store  was  burglarized  last  night,  and  the   thieves   carried 
away  cash  $50,  and  goods  valued  at  $125. 

*'     16.     Paid  an  advertising  bill  in  the  Herald,  in  cash  $34.60. 


32  THEORY  OF  BOOKKEEPING 

191.. 

Oct.  16.     Sold  my  neighbor  one  ton  of  coal  from  my  fuel  supply  for  $7.50 
cash. 

17.     The  officers  have  caught  the  thieves  who  burglarized  my  store 
and  recovered  goods  amounting  to  $75,  and  cash  $20. 

19.  James  W.  Austin  whose  account  was  entered  as   worthless   on 
on  the  8th,  instant,  sends  me  $5  to  apply  on  the  debt. 

"  19.  Bought  at  auction  a  job  lot  of  merchandise  for  $200,  which  I 
have  sold  without  removing  for  $250.  Net  profit  received  in 
cash  $50. 

20.  Lost  my  overcoat  valued  at  $40,  at  the   railroad   station,    and 
found  a  $5  bill  which  I  have  put  into  the  business. 

*'  21.  James  Dudley's  note  for  $20  which  I  hold  is  found  to  be  worth- 
less, and  a  total  loss. 

''  22.  A  customer  called  today  and  claimed  the  $10  counterfeit  bill, 
saying  he  had  since  learned  it  was  not  genuine,  and  wij^hed  to 
recover  it.     He  paid  me  $10  in  good  coin. 

'*  23.  I  have  a  deposit  of  $500  in  the  Mutual  Bank.  The  bank  has 
failed  and  the  amount  is  lost. 

' '  24.  Sublet  a  portion  of  our  store  to  Henry  Walker  who  has  paid 
one  months  rent,  cash  in  advance,  $35. 

*"      26.     Sold  for  cash,  postage  stamps  60c. 

**    27.     Sold  to  W.  M.  Harris  on  his  note  at  30  days,  200  bu.    potatoes 
@  40c,  $80;  50  bu.  apples  @  60c,  $30.     Total  $110. 

"    27.     Paid  J.  J.  Fisher  &  Co.,  cash  for  calcimining  and  xjainting  our 
store  room,  $45. 

"  28.  The  receiver  of  the  Mutual  Bank  has  paid  a  cash  dividend  of 
25%  of  my  claim.     Cash  received  $125. 

*'  29.  Compromised  my  claim  against  Joseph  Dreifuss  of  $30,  by 
accepting  $15  in  cash  in  full  settlement. 

"    29.     Discounted  W.  M.  Harris'  note  at  First  National  Bank.     Face 
of  note  $110,  discount  off  $1,  cash  received  $109. 

* '  30.  Paid  Mendel  Lithographing  Co. ,  cash  for  letter  paper,  envel- 
opes and  other  office  supplies  $46.30. 


JOURNALIZING  33 


LESSON  XI 
PROPRIETOR'S  ACCOUNT 

Proprietor's  Account.  It  is  necessary  that  an  account  should  be 
opened  with  the  proprietor  or  owner  of  the  business  in  order  to  show 
his  relation  to  the  business,  how  much  he  has  invested  or  withdrawn. 

The  term  "Stock"  is  sometimes  substituted  for  the  proprietor's  name. 

Resources  or  Assets  are  the  various  kinds  of  property  which  belong 
to  the  business,  such  as  mdse.,  cash,  bill  receivable,  etc. 

Liabilities  are  the  obligations  which  the  business  owes,  consisting  of 
bills  payable  and  personal  accounts. 

Net  Capital  is  the  excess  of  resources  over  liabilities. 

Net  Insolvency  is  the  excess  of  liabilities  over  resources. 

The  proprietor  is  credited  with  whatever  he  invests  in  the  business  and  debated 
with  whatever  he  draws  out  of  the  business.  His  account  is  very  similar  to  any  other 
personal  account. 

The  student  must  not  conclude  that  the  proprietor  and  the  business  are  one  and  the 
same.  The  proprietor  is  entirely  distinct  and  separate  from  the  business.  He  merely 
conducts  the  business. 

Before  opening  a  set  of  books  a  statement  of  the  resources  to  be  invested  must  be 
made  out.  These  usually  consist  of  cash,  and  in  some  cases,  of  merchandise  or  one  or 
two  other  kinds  of  property. 

Since  these  resources  are  to  be  invested  or  received  by  the  business,  they  must  be 
debited  under  proper  titles,  and  the  proprietor  credited  for  their  total. 

If  liabilities  are  to  be  assumed  by  the  business,  (which  is  rather  unusual),  these 
must  be  credited  under  their  proper  titles  and  the  proprietor  charged  for  their  total. 

Rule  XVIII.     Debit  the  different  kinds  of  property   invested    and    credit   the 
proprietor  for  the  amount  of  his  investment. 

Rule  XIX.     Debit  the  proprietor  for  amounts  withdrawn  from    the    business, 
or  obligations  assumed  by  the  business  for  him. 

191.. 

Nov.  1.       John  Davis  has  this  day  begun   business  with   the   following 

assets:    Cash  $2000;  stock  of  goods  worth  $3000;  O.  N.  Cord's 

note  $500.     Total  $5500. 


34  THEORY  OF  BOOKKEEPING 

191.. 

Nov.  5.       William  E.  Mason  has   this   day   invested   in   business,    cash 
$3000. 

7.  John  C.  Phillips  has  begun  business  with  the  following  assets 
and  liabilities:  Cash  on  hand  $3200;  mdse^  in  store  $5000; 
store  building  worth  $5000;  fixtures  $250;  a  note  against  David 
Wilcox  $600;  John  M.  Palmer  owes  on  account  $120.  Total 
$14170.  He  owes  notes  outstanding  $1500.  Field  &  Co.,  on 
account,  $800;  H.  B.  Claflin  &  Co.  on  account  $1000;  mortgage 
on  storebuilding  due  in  2  years  $2000.  Total  $5300. 
Mortgage  is  a  Bills  Payable. 

*'     12.     Wm.  E.  Mason  has  withdrawn  from  the  business  for  his   per- 
sonal use,  cash  $50. 

13.     John  Davis  having  received  a  bequest  from   a   deceased   rel- 
ative, has  invested  in  the  business,  cash  $5000. 

17.     John  C.  Phillips  has  taken  from  the  cash  drawer,  cash   $8.40, 
with  which  to  pay  a  private  bill. 

"     20.     William  E.  Mason  has  loaned  the  business  $500  cash. 


a 


ti 


ti 


25.  George  T.  Williamson  has  this  day  commenced  business  with 
a  capital  as  follows:  Cash  $1000;  note  against  Henry  Hunt 
$300;  interest  accrued  on  the  note  $10;  an  account  against  L. 
M.  Harvey  $250.     Total  $1560. 

25.  Geo.  T.  Williamson  owes  on  commencing  business  the  follow- 
ing: Note  favor  Frank  Casper  $240;  interest  accrued  on  the 
note  $4.50;  N.  Y.  Hamilton  on  account  $65.     Total  $309.50. 

26.  Henry  Farnsworth  has  this  day  begun  business  in  the  retail 
boot  and  shoe  line,  by  investing  cash  $2500;  store  fixtures 
$500;  goods  on  the  shelves  $1500;  an  account  against  F.  W. 
Lawson,  considered  good,  $500.     Total  $5000. 

28.  Geo.  T.  Williamson  has  this  day  made  an  additional  invest- 
ment in  the  business,  of  cash  $1000. 

29.  John  C.  Phillips  has  this  day  paid  Field  &  Co.  in  cash  the 
amount  which  he  owes  them  on  account,  $800. 

30.  John  Davis  has  withdrawn  from  the  business  for  his  personal 
use,  merchandise  amounting  to  $65. 

"     30.     Geo.  T.  Williamson  has  this  d&y  paid  his  doctor's  bill  in  cash 
from  the  store,  $125. 


(( 


(( 


JOURNALIZING  35 


LESSON  XII 
PARTNER'S  ACCOUNTS 

A  Copartnership  is  an  association  of  persons  who  combine  their 
labor,  skill  or  capital  in  business  for  the  purpose  of  profit. 

Each  partner  must  have  an  account  opened  with  him,  in  order  to 
show  his  relation  to  the  business  and  to  the  other  partners. 

It  would  be  well  to  have  written  articles  of  copartnership,  so  that  a  thorough  under- 
standing would  exist  between  the  partners. 

Each  partner's  account  is  treated  exactly  the  same  as  the  account  of  a  single  pro- 
prietor,— credited  with  his  investment  and  debited  for  amounts  withdrawn,  or  for 
obligations  assumed  by  the  firm  for  him. 

Rule  XX.  Credit  each  partner  for  the  amount  of  his  investment,  and  charge 
him  for  amounts  withdrawn  or  for  obligations  assumed  by  the 
firm  for  him. 

When  a  partner  g'Oes  out  of  business,  we  make  exactly  the  reverse  entry  from  the 
one  made  when  he  goes  into  business,— we  debit  him  and  credit  the  cash  or  other 
assets  which  he  takes  with  him, 

191.. 

Dec.  1.       Arthur  Holmes  and  William  Foster  have   this    day   formed   a 

partnership. 

Arthur  Holmes  invests,  cash  $800;  mdse.  in   store  §600;    notes 

receivable  $1000.     Total  $2400. 

William  Foster  invests,  cash  $2000. 


(( 


5.  William  Foster  has  this  day  made  a- further  investment  in  the 
business  of  cash,  $400. 

5.  J.  D.  Odell  and  L.  V,  Parker  have  this  day  formed  a  copartner- 
ship for  the  purpose  of  conducting  a  grocery  business,  under 
the  firm  name  of  Odell  &  Parker. 

J.  D.  Odell  invests,  cash  $2000;  an  account  against  Henry   Al- 
ston $100,  which  the  firm  considers  good.     Total  $2100. 
L.  V.  Parker  invests,  cash  $1800;  a  note  of  $300  against  Daw- 
son Bros.,  which  the  firm  is  willing  to  acceptc     Total  $2100. 


(( 


36  THEORY  OF  BOOKKEEPING 

191.. 

Dec.  5.       J.  D.  Odell  owes  a  note  of  $250  in  favor  G.    M.   Wilson   which 
the  firm  assumes. 

"7.      L.  V.  Parker  owes  George  Jackson  on  account  $190;  and  Wal- 
lace Duncan  $60,  to  be  assumed  by  the  new  firm. 

10.     J.  D.  Odell  has  this  day  withdrawn,  for  private  use,  cash  $40. 

12.  The  firm  of  Holmes  &  Poster  has  this  day  dissolved,  Arthur 
Holmes  retiring  from  the  business.  William  Foster  continues 
the  business  and  pays  the  retiring  partner  the  full  amount  of 
his  investment  in  cash  $2400. 

14.  The  firm  of  Odell  &  Parker  has  this  day  admitted  their  head 
salesman,  Louis  Armstrong,  as  a  third  partner  in  the  business, 
he  investing  cash  $2000. 

18.  L.  V.  Parker  withdraws  from  the  business,  for  private  pur- 
poses, cash  $400. 

20.  Owing  to  ill  health  L.  V.  Parker  finds  it  necessary  to  withdraw 
from  active  business,  and  he  has  this  day  sold  his  interest  in 
the  firm  to  the  remaining  partners  for  cash,'  $1000;  note  di  e  in 
one  year,  6%  interest,  $500. 

25.  William  Foster  has  this  day  entered  into  partnership  with 
Granville  HowC;  the  firm  name  and  style  to  be  Foster  &  Howe. 
Partners  equal  in  gains  and  losses. 

William  Foster  invests  his  present  business  consisting  of 
mdse.  $2800;  notes  receivable  $1600;  store  building  and  lot 
worth  $3500  on  which  he  owes  a  mortgage  of  $1500  with  in- 
terest accrued  $100;  owes  notes  outstanding  $850,  and  Newton 
&  Simmons  on  account  $1320. 

Granville  Howe  invests,  cash   $2000;    10  shares   City   Bank 
Stock  worth  $112i,  $1125;  John  D.    Severn's  note  due   in  30 
days,  for  $2000,  interest  accrued  thereon  $246. 
Granville  Howe  owes  Dickens  &  Brown   $280;   First   National 
Bank  on  note  $400. 

27.  Granville  Howe  has  this  day  made  an  additional  investment  in 
the  business,  cash  $1000. 


<( 


QUESTIONS  FOR  REVIEW  37 


QUESTIONS  FOR  REVIEW 


1.  What  is  bookkeepino:? 

2.  Define  Single  Entry. 

3.  Define  Double  Entry. 

4.  Define  debtor  and  creditor. 

5.  What  is  an  original  entry? 
G.  What  is  a  Journal? 

7.  How  many  parts  are  there  to  every  proper  journal  entry,  and  what  are  tliey? 

8.  Write  the  General  Rule  for  journalizing. 

9.  Define  a  personal  account. 

10.  What  is  a  bill  receivable?    A  bill  payable? 

11.  What  is  meant  by  the  word  Sundries? 

12.  Define  a  draft. 

13.  What  is  the  difference  between  a  draft  and  a  bill  of  exchange? 

14.  What  is  it  to  honor  a  draft? 

15.  Define  a  sight  draft,  also  a  time  draft. 

16.  What  is  an  acceptance? 

17.  Define  interest.     When  do  you  debit  interest  and  when  credit  it? 

18.  Define  a  commission  merchant. 

19.  What  is  a  shipment  or  consignment? 

20.  Define  an  account  sales,  also  net  proceeds. 

21.  What  is  discount? 

22.  Define  exchange. 

23.  For  what  is  expense  debited?    For  what  is  profit  and  loss  debited? 

24.  Define  resources  or  assets  and  liabilities. 

25.  What  is  net  capital?    Net  insolvency? 


38  THEORY  OF  BOOKKEEPING 


TO  THE  STUDENT 


You  have,  in  the  preceding  pages,  learned  the  principles  of  debit 
and  credit,  and  how  to  apply  them  to  business  transactions.  If  you 
have  mastered  these  thoroughly,  you  have  a  solid  foundation  on  which 
to  build  your  knowledge  of  bookkeeping.  If  you  have  not,  it  would  be 
well  to  review  and  perfect  yourself  before  proceeding  further  in  the 
subject. 

You  are  now  to  advance  to  new  rules  and  problems,  and  you  will 
get  a  glimpse  of  the  ways  and  methods  of  business.  Endeavor  to  master 
each  step  as  you  proceed.  Be  accurate  in  your  figures,  especially  ad- 
dition. Develop  a  plaia  business  handwriting,  and  withal,  write  up  your 
books  and  papers  in  a  neat  and  careful  manner.  Neatness  and  accuracy 
are  prime  qualities  of  a  good  bookkeeper 


ACCOUNTS 


39 


LESSON  XIII 

ACCOUNTS 

An  Account  is  a  group  of  items,  either  debits  or  credits,  or  both,  so 
arranged  under  a  proper  head,  as  to  exhibit  certain  facts  in  regard  to 
the  business. 

Debits  and  Credits.  An  -account  has  two  sides, — the  debits  on  the 
left,  and  the  credits  on  the  right. 

The  Ledger  is  tlie  book  of  accounts.  It  consists  of  notliing  but  ac- 
counts, and  in  double  entry  should  include  accounts  with  every  person 
or  species  of  property  which  enters  into  business  relations  with  the 
concern.  The  following  form  will  illustrate  the  ledger  account  of  a 
customer. 


Jliy         C^^^^.^^.^^^^^^^..^^.^^-         (^' 


-/^/- 


/^ 


;3^^^ 


"Tp^.^^^^^^^ 


J3 

/ 


Jo 


^^^ 


/ 

xr 


~^^J^ 


cZO 

erf 


Posting.  The  purpose  of  the  Ledger  is  to  collect  all  of  the  debits  and 
credits  contained  in  the  Journal  under  proper  heads.  This  process  is 
called  posting. 

When  all  of  the  debits  and  credits  of  a  certain  person  or  species  of  property  are  ar- 
ranged under  one  head,  the  debits  opposite  the  credits,  it  is  a  simple  matter  to  ascertain 
the  diflference  or  net  result. 


40  THEORY  OF  BOOKKEEPING 

DIRECTIONS 

Journalize  the  following  transactions,  which  are  supposed  to  rep- 
resent a  brief  months  business  preparatory  to  posting  the  entries  as  will 
be  explained  in  next  lesson. 

Write  the  proper  explanation  beneath  each  Journal  entry.  In  case  of  purchases 
(since  you  receive  a  bill)  it  will  be  sufficient  to  state  in  your  journal  from  whom  pur- 
chased, terms  of  purchase  and  "Mdse.  per  bill"  instead  of  itemizing.  In  case  of  sales, 
state  to  whom  sold,  terms,  and  itemize  the  sale. 

Jan.  2,  191..  John  S.  Spencer  has  this  day  commenced   business   by   in- 
vesting cash  $3000. 

191.. 

Jan.       2        Cash  3000 

John  S.  Spencer  3000 

Invested  in 
business  this  day 


Jan.  2.       Rented   store   No.    48   E.    Huron    St.,    paying    cash   for   one 
month's  rent  in  advance  $50. 

"  3.  Bought  of  Sprague,  Warner  &  Co.,  for  cash,  10  brls  winter 
wheat  flour  @  $4.75,  $47.50;  5  cases  rolled  oats  @  $2.85,  $14.25; 
3  brls.  cut  loaf  sugar  @  $7.50,  $22.50,  6-100  lb  drums  cube 
sugar  @  2ic  lb,  $15,  12  cases  silver  leaf  lard  @  $6.30,  $75.60. 
Total  $174.85, 
Explanation.     Bought  of  Sprague,  Warner  &Co.  for  cash,  Mdse,  per  bill. 

**  4.  Bought  of  J.  C.  Downing  &  Co.  on  30  days  credit,  6  tubs  mack- 
erel at  $7,  $42;  5  brls.  Iceland  herring  @  $10.50,  $52.50;  2  brls. 
blood  red  salmon  @  $16,  $32;  10  doz.  cove  oysters  @  80c,  $8. 
Total  $134.50. 

*'  5.  Sold  to  Lewis  M.  Wood,  for  c£«sh,  1  brl.  winter  wheat  flour 
$5.50;  20  lbs.  cut  loaf  sugar  @  4c,  80c;  5  pkgs.  rolled  oats  @ 
10c,  50c;  1  tub  mackerel  $9.     Total  $15.80 

*'    8.       Bought  of  Geo.  E.  Davis,  Redlands,  Cal.,  on  30  days,  75   boxes 
fancy  California  prunes,  25  lbs  each  at  15c,  $281.25, 

*'  10.  Sold  to  A.  W.  Daniels,  LaHarpe,  111.,  on  60  days,  4  cases  sil- 
ver leaf  lard  at  $7.50,  $30;  10  boxes  fancy  California  prunes 
at  $5,  $50;  2-100  lb  drums  cube  sugar  at  3c  lb.  $6;  1  brl.  blood 
red   salmon,  $17.50.     Total  $103.50. 


ACCOUNTS  41 

191.. 

Jan.  11.  Bought  of  C.  M.  Harding  &  Co.,  on  30  days  note,  6  brls.  Gra- 
ham flour  @  $4.60,  $26.40;  5  cases  Japan  type  rice  @  $8.10, 
$40.50;  15  sacks  California  lima  beans  @  $6,  $90;  12  cases  do- 
mestic macaroni  @  $1.80,  $21.60;  12  cases  Egg  0-C  corn  flakes 
toasted  @  $2.70,  $32,40;  6  cases  Saratoga  chip  potatoes  (^  $2, 
$12.     Total  $222.90. 

"    12.     Paid  cash  for  advertising  in  "Society  News"  $5. 

"  13.  John  S.  Spencer  has  this  day  withdrawn  for  his  private  use, 
cash  $10  and  goods  as  follows:  1  box  fancy  California  prunes 
$5,  2-3  lb.  cartons  Japan  type  rice  @  8c  lb.,  48c;  5  pkgs. 
rolled  oats  at  10c,  50c.     Total  $5.98. 

"  15.  Sold  to  L.A.  Parker  on  30  days,  10  sacks  California  lima  beans 
@  $8,  $80;  6  cases  Saratoga  chip  potatoes  @  $2.50,  $15;  5  tubs 
mackerel  @  $9.50,  $47.50;  2  brls.  Graham  flour  @  $5.20,  $10.40. 
Total  $152.90. 

"  17.  Bought  of  Sprague,  Warner  &  Co.,  for  cash,  2  brls.  refiner's 
syrup  @  $8.75,  $17.50;  5  brls.  molasses  Sugarland  brand  @ 
$6.60,  $33.30.     Total  $50.80 

"  17.  Paid  cash  to  C.  &  N.  W.  Ry.  for  freight  on  goods  just  received 
from  Sprague,  Warner  &  Co.,  $4.60. 

"  18.  Received  of  A.  W.  Daniels,  LaHarpe,  111.,  his  check  to  ap- 
apply  on  account,  $50. 

"  20.  Sold  Geo.  P.  Anderton,  Mohne,  111.,  on  30  days,  4  cases  rolled 
oats  @  $3,  $12;  2  brls.  cut  loaf  sugar  @  $9.50,  $19;  4-100  lb. 
drums  cube  sugar  @  3c  lb.,  $12;  1  brl.  refiner's  syrup  @  $10; 
2  brls.  Sugarland  brand  molasses  @  $8,  $16.     Total  $69. 

21.     Received  of  Li.  A.  Parker  his  note  at  60  days,  bearing   6%    in- 
terest, to  apply  on  account,  $100. 

Shipped  to  Horton  Bros.,  Detroit,  Mich.,  for  sale  on  my  ac- 
count and  risk,  50  boxes  fancy  California  prunes  @  $3.75; 
$187.50.     Paid  cash  for  drayage  $1.50. 


(( 


"      9-> 


42  THEORY  OF  BOOKKEEPING 


LESSON  XIV 

OPENING  ACCOUNTS— POSTING— TRIAL  BALANCE 

Opening  Ledger  Accounts  consists  in  writing  the  name  of  the  account 
directly  across  the  centre  of  the  page.  An  account  should  always  begin 
at  the  top  of  a  page.  Ledger  accounts  should  be  written  in  a  plain,  bold 
hand.  Never  abbreviate  ledger  headings  unless  names  of  persons  or 
firms,  when  these  should  conform  to  the  firm  name  and  style. 

Order  of  Precedence.  The  proprietor's  or  partners'  accounts  should 
always  come  first  and  these  are  usually  followed  by  Cash,  Merchandise, 
Bills  Receivable,  Bills  Payable  and  Expense  in  the  order  named,  leav- 
ing personal  accounts  to  the  last,  since  these  may  be  quite  numerous. 

DIRECTIONS 

Proceed  to  open  the  following  accounts  in  your  ledger:  John  S. 
Spencer,  at  top  of  first  page;  Cash,  10  lines  below  Spencer's  account; 
Merchandise  15  lines  below  cash;  Bills  Receivable,  top  of  second  page 
extending  8  lines  below:  Bills  Payable  extending  8  lines  below;  Ex- 
pense, 8  lines;  J.  C.  Downing  &  Co.,  8  lines;  Geo.  E.  Davis,  Redlands, 
Cal.,  8  lines;  A.  W.  Daniels,  LaHarpe,  111.,  8  lines;  L.  A  Parker,  8  lines; 
Geo  P.  Anderton,  Moline,  111.,  8  lines;  Shipt.  Horton  Bros.,  Detroit,  8 
lines. 

Posting.  Having  in  the  previous  lesson  journalized  the  transactions, 
you  will  now  proceed  to  post  the  items  in  your  journal  to  their  proper 
ledger  accounts  as  follows: 

The  first  item  in  your  journal  is  "Cash  Dr.  $3000."  Transfer  this 
item  to  the  left  hand  or  Dr.  side  of  the  Cash  account  in  your  ledger,  en- 
tering the  date  Jan.  2,  191  and  writing  John  S.  Spencer  in  the  wide 
column.     Write  the  amount  $3000  in  the  money  column.  {See  ledger  form.) 

In  the  narrow  column  at  the  left  of  the  money  column,  which  is  the  folio  (page) 
column,  write  the  page  of  your  journal  from  which  the  item  was  transferred,  and  in  the 
folio  column  in  your  journal  write  the  page  of  the  ledger  to  which  the  item  was  trans- 
ferred. 

This  process  of  cross  paging  is  called  post-marking  and  is  necessary  for  the  sake  of 
reference. 


ACCOUNTS 


43 


The  next  item  in  your  journal  is  John  S.  Spencer,  Cr.  $3000.  Trans- 
fer this  to  the  credit  side  of  John  S.  Spencer's  account,  writing  first  in 
the  date,  Jan.  2,  191..  and  "Cash"  with  the  amount  $3000  in  the  money 
column.     {See  ledger  form.) 

Postmark  the  entry  by  writing  the  page  of  the  journal  in  the  ledger  and  the  page  of 
the  ledger  in  the  journal  opposite  the  item  transferred. 


FORM  OF  LEDGER 


^ 


2^<e<?'2'-e^<?r 


(3ty 


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t 


//' 


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\;/£^-inyyt^diz:^'^^^'-^^^^^t^^-*' 


^<^^:tA^'A  'z.^^c 


C^-^^L-.^d-^'AL.,^ 


fooo 


^O 


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So 


C^z^^X- 


^^t^:^^ 


^^c±e^ 


c.^uJ 


v9oa9 


si^ 

k^^ 


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44  THEORY  OF  BOOKKEEPING 

The  next  item  in  your  journal  is  "Expense  Dr.  $50."  Transfer 
this  item  to  the  debit  side  of  Expense  account,  writing  date,  "Cash"  and 
the  amount,  $50,  in  the  money  column. 

Postmark  the  entry  by  writing  the  page  of  the  journal  (1)  in  the  ledger  and  the  page 
of  the  ledger  (2)  in  the  journal. 

The  next  item  in  your  journal  is  "Cash  Cr.  $50."  Transfer  this  to 
the  credit  side  of  Cash  account,  writing  date,  "Expense"  and  the  amount 
in  the  money  column. 

Postmark  the  entry  by  cross-paging  as  before. 

The  next  item  in  your  journal  is  "Mdse.  Dr.  $174.85."  Enter  this 
on  the  Dr.  side  of  Merchandise  account,  with  date  and  "Cash"  (as  an  ex- 
planation) and  the  amount  in  the  money  column. 

Postmark  the  entry. 

The  next  item  in  your  journal  is  "Cash  Cr.  $174.85,"  hence  this 
must  be  carried  to  the  Cr.  side  of  Cash  account  with  date  and  amount, 
writing  in  the  wide  column  as  an  explanation,  the  word  "Mdse." 

Postmark. 

Next  we  have  "Mdse  Dr.  $134.50."  We  enter  this  amount  on  the 
Dr.  side  of  Merchandise  account  with  date  and  amount,  writing  in  the 
wide  column  as  an  explanation  "J.  C.  Downing  &  Co."  and  postmark. 

Now  go  to  the  credit  side  of  J.  C.  Downing  &  Co's  account  and 
credit  them  with  "Mdse.  $134.50"  writing  date  and  amount  in  proper 
columns,  and  postmark  the  entry. 

Thus  continue  to  transfer  every  debit  item  and  every  credit  item  to 
its  proper  account  in  the  ledger,  postmarking  each  entry  as  it  is  posted. 

In  posting  an  entry  where  there  are  several  debits  or  credits  we  use  the  word 
"Sundries"  (Sunds)  as  an  explanation  in  the  ledger.  Thus  in  debiting  John  S.  Spencer 
in  the  entry  of  the  13th,  we  enter  date  and  "Sunds  $15.98." 

Checking.  To  make  sure  that  the  posting  has  been  correctly  done, 
begin  with  the  first  item  in  the  journal,  trace  the  item  to  its  proper  place 
in  the  ledger,  and  if  it  is  correct,  place  a  small  pencil  check-mark  (•)  op- 
posite the  figures.  Thus  proceed  to  trace  every  entry  from  the  journal 
and  check  all  that  are  correct.  This  will  prevent  items  from  being 
posted  to  the  wrong  account. 

Footing.  Take  a  sharp  pencil  of  rather  hard  quality,  go  over  the 
accounts  in  your  ledger  and  in  all  accounts  where  there  are  more  than 
one  item  on  either  side,  add  the  items  and  write  the  total  in  small,  clear 
figures  close  up  under  the  bottom  figures  of  the  column.  This  is  called 
"footing"  the  ledger. 


ACCOUNTS 


45 


Trial  Balance.  Next  take  a  sheet  of  journal  paper  and  write  across  the 
top  "Trial  Balance,  Jan.  31,  191.."  Write  the  names  of  all  of  the  accounts 
as  they  appear  in  the  ledger,  placing  the  total  debits  in  the  left  hand  money 
column,  and  the  total  credits  in  the  right  hand  money  column.  Place 
the  folio  of  the  ledger  at  the  left,  opposite  each  account,  to  show  where 
it  comes  from.     Your  trial  balance  must  then  agree  with  the  following: 


^^ll:i>^-<2>^^-^S-^ 


a^^?-2^-c<^^Z,^ty  cPA  /  f  /- 


^ 
^ 
^ 

JL 
^ 


ro 


//C>:2^  cpr   ^^:2o  or 


cyooo 


Add  the  two  columns  of  the  Trial  Balance  and  place  the  totals  be- 
low. These  totals  must  agree  since  it  is  one  condition  of  double  entry 
that  the  books  must  be  in  balance  at  all  times. 

The  trial  balance  is  not  proof  that  the  ledger  is  absolutely  correct.  It  only  proves 
that  the  ledger  is  in  balance.  An  item  may  have  been  posted  to  a  wrong  account,  and 
this  the  trial  balance  would  not  detect.  Checking  the  items  will  detect  any  errors  in 
the  postings. 


Af? 


THEORY  OF  BOOKKEEPING 


LESSON  XV 
CLOSING  THE  LEDGER 

Closing.  Closing  an  account  consists  in  putting  it  in  such  condition 
that  it  will  exhibit  certain  facts  in  regard  to  the  business,  other  than 
those  which  it  exhibits  ordinarily  as  an  account. 

To  close  an  account  we  write  the  difference  on  the  smaller  side  in  red  ink. 

Classes  of  Accounts.  Accounts  are  of  two  kind  viz:  Those  which 
show  resources  or  liabilities,  called  Financial  Accounts,  such  as  Cash, 
Bills  receivable.  Bills  Payable  and  Personal  accounts,  and  those  which 
show  gains  or  losses,  called  Revenue  Accounts,  such  as  Merchandise, 
Real  Estate,  Shipments  and  other  property  accounts,  also  Expense,  In- 
terest, etc.     The  following  analysis  will  exhibit  this  classification: 


Accounts 


Financial 


Revenue 


Exhibit 
Resources 

or 
Liabilities 

Exhibit 
Gains 

or 
Losses 


Close 
-  To  or  By 
[  Balance 


f  Close 
To  or  By 
Profit  and  Loss 


Inventory.  Before  closing  a  set  of  books,  if  there  is  any  property  on 
hand  belonging  to  the  busines  it  will  be  necessary  to  take  an  inventory 
of  such  property,  in  order  to  ascertain  what  the  gain  or  loss  has  been 
upon  the  portion  sold. 

Taking  an  inventory  is  called  "Taking  an  Account  of  Stock"  and  consists  in  going 
over  the  stock  or  property  carefully  and  estimating  the  value  of  each  article.  The  value 
is  figured  at  cost  price  with  freight  or  other  charges  added  and  deductions  for  damaged 
or  shop- worn  conditions. 


ACCOUNTS 


47 


Inventory  of  Property  on  Hand  Jan.  31, 191. 


280 

u 

8 

5 

1 

10 

178 

5 

12 

12 

1 

3 


brls. 


Winter  Wheat  Flour  ^.  75 

Graham  Flour  Jf..50 

pJcgs.  Boiled  Oats  .08 

lbs.  Cut  Loaf  Sugar  .02i 

hxs.  Fancy  Cal.  Prunes  25  lb.  ea.     .15 

cases  Silver  Leaf  Lard  6. 30 

brls.  Iceland  Herring  10.50 

Blood  Red  Salmon  16.00 

doz.  Cove  Oysters  .80 

cartons  Japan  Type  Bice,  3  lb.  ea.   .7i 

sacks  California  Lima  Beans  .06 

cases  Domestic  Macaroni  1.80 

"    Fgg  0-C  Corn  Flakes,  Toasted.  2.70 

brl.  Bejiner^s  Syrup  8.75 

' '     Molasses,  Sugar  land  Brand     6. 60 

Shijjt.  Horion  Bros.  Detroit  Mich. 


h2 

75 

18 

20 

80 

7 

52 

50 

50 

JfO 

52 

50 

16 

8 

JfO 

05 

30 

21 

60 

32 

ho 

8 

75 

19 

80 

U20 
200 

55 


DIRECTIONS 

Cash.  Begin  with  the  first  account  in  your  ledger  after  the  pro- 
prietor's, which  is  Cash.  This  is  a  Financial  account  and  hence  will  close 
with  Balance.  The  credit  side  being  the  smaller  we  enter  in  red  ink  on 
the  credit  side  "Jan.  31,  Balance  $2769.05." 

Closing  entries  are  made  in  red  ink. 

Merchandise.  The  next  account  is  Merchandise.  This  is  a  Revenue 
account  but  has  an  inventory  and  in  order  to  ascertain  the  gain  or  loss 
we  must  first  enter  the  inventory  on  the  credit  side.  Since  unsold  prop- 
erty is  a  resource  or  financial  item,  we  enter  the  inventory  as  a  Balance 
item,  viz:  "Jan.  31,  Balance  $420.55."  Add  the  inventory  to  the  credit 
side,  and  we  find  the  total  to  be  larger  than  the  debit  side.  We  there- 
fore enter  the  difference  in  red  ink  on  the  Dr.  side  "Jan.  31,  Profit  and 
Loss  $86.33." 

We  enter  the  inventory  on  the  credit  side  because  if  the  goods  were  sold  they  would 
then  be  entered  upon  that  side  of  the  account,  and  also  for  the  reason  that  every  resource 
is  a  credit  red  ink  balance. 

Bills  Receivable.  Your  next  account  is  Bills  Receivable.  This  is  a 
Financial  account  and  closes  with  Balance  on  the  credit  side  in  red  ink. 

Bills  Payable  is  a  Fmancial  account  and  closes  with  Balance  on  the 
debit  side  in  red  ink. 

Expense  is  a  Revenue  account  and  hence  will  be  closed  by  entering 
the  difference  on  the  smaller  side  in  red  ink  "Jan.  31.  Profit  and  Loss  $55." 


48 


THEORY  OF  BOOKKEEPING 


Personal  Accounts  are  closed  with  Balance  since  they  are  Financial 
accounts. 

Shipt.  Horton  Bros.,  Detroit,  Mich.,  is  a  Revenue  account  with 
an  inventory.  The  inventory  must  be  entered  on  the  credit  side  as 
Balance  and  then  the  difference  between  the  two  sides  as  Profit  and  Loss, 
tlie  same  as  previously  exemplified  in  the  Merchandise  account. 


PROFIT  AND  LOSS 

Profit  and  Loss  Account.  Having  closed  all  the  accounts  in  your 
ledger,  except  the  proprietor's,  you  will  next  proceed  to  open  a  Profit 
and  Loss  account.  Into  this  account  you  will  carry  all  red  ink  Profit  and 
Loss  entries  from  the  various  Revenue  accounts  in  the  ledger,  in  order 
to  ascertain  your  net  loss  or  gain. 

From  the  debit  side  of  Merchandise  account  we  transfer  the  Profit 
and  Loss  red  ink  entry  to  the  credit  side  of  Profit  and  Loss  account, 
"Jan.  31,  Mdse.  $86.33"  in  black  ink,  and  postmark  both  entries  by 
cross  paging. 

From  the  credit  side  of  Expense  account  we  transfer  the  Profit  and 
Loss  red  ink  entry  to  the  debit  side  of  Profit  and  Loss  account  "Jan.  31, 
Expense  $55"  in  black  ink,  and  postmark  both  entries. 

From  the  debit  side  of  Shipt.  Horton  Bros.,  Detroit,  account  we 
transfer  the  Profit  and  Loss  red  ink  entry  to  the  credit  side  of  Profit 
and  Loss  account  "Jan.  31,  Shipt.  Horton  Bros.  $11"  in  black  ink,  and 
postmark. 


//-' 

r^^/c^ 

A 

c 

/ 

77 

...... 

J%z^ 

J/ 

/ 

JS 

77 

ss 

It  will  thus  be  readily  seen  that  the  Profit  and  Loss  account  is  com- 
posed of  a  collection  of  entries  showing  gains  and  losses  from  all  of  the 
revenue  accounts  in  the  business.  The  credit  side  exhibits  gains,  while 
the  debit  side  shows  losses.  The  difference  between  the  two  sides  then 
must  show  the  net  profit  or  net  loss  of  the  business. 


ACCOUNTS 


49 


PROPRIETOR'S  ACCOUNT 

Proprietor's  Account.  The  Profit  and  Loss  account  will  now  be  closed 
by  entering  the  difference  between  the  two  sides  on  the  smaller  side. 
John  S.  Spencer  being  the  proprietor  of  the  business,  will  receive  the 
profits,  hence  we  make  the  entry  "Jan.  31,  John  S.  Spencer  $42.33"  in  red 
ink  on  the  debit  side.  Transfer  this  entry  to  the  opposite  side  (Cr.)  of 
John  S.  Spencer's  account  "Jan.  31,  Profit   &   Loss  $42.33"  in  black  ink. 

In  transferring  entries  take  notice  that  you  change  sides  and  change  ink. 

Close  John  S.  Spencer's  account  by  entering  on  the  smaller  side  "Jan. 
31,  Balance  $3026.35"  in  red  ink. 

Ruling  and  Footing.  All  accounts  having  more  than  one  item  on 
either  side  should  be  ruled  first  with  a  single  line  directly  beneath  the 
figures  and  across  the  money  columns  only,  and  then  with  a  double  rul- 
ing on  the  next  line  below,  across  all  columns  except  the  wide,  or  ex- 
planatory columns.  (See  Profit  and  Loss  account.)  Accounts  having  only 
a  single  item  on  both  sides  may  be  ruled  with  double  lines  only,  one 
space  below  the  figures.  (See  Bills  ReceivaUe  account.)  Always  rule  up 
personal  accounts  at  any  time  when  they  balance. 

Rulings  on  both  sides  of  the  account  must  be  even.  In  case  one  side  of  an  account 
is  much  longer  than  the  other,  the  space  may  be  closed  by  a  diagonal  line. 


^^^^^^ 


-^z^/ky" 


/^0 


J/ 


/oo 


All  accounts  having  more  than  one  item  on  a  side  must  be  "footed, 
the  totals  being  placed  within  the  rulings  below  in  black  ink. 


50  THEORY  OF  BOOKKEEPING 


LESSON  XVI 

ANALYSIS  OF  ACCOUNTS 

It  is  important  that  the  student  should  understand  the  nature  of  each 
account,  and  the  meaning  of  the  entries  therein. 

Cash.  First  entry  is  always  made  on  the  Dr.  side.  (Why?)  Dr.  side 
shows  cash  received.  Or.  side  shows  cash  paid  out.  Difference  must 
agree  with  cash  on  hand.  Credit  side  can  never  exceed  the  debit. 
(Why?)    Casli  on  hand  is  a  resource. 

Bills  Receivable.     First  entry  is  always  made  on  Dr.  side.  Dr.    side 

shows  notes  received.     (Why?)    Cr.  side   notes  disposed  of.  Difference 

must  agree  with  notes  on  hand.     Cr.  side  can  never  exceed  the    debit. 
(Why?)     Notes  on  hand  are  a  resource. 

Bills  Payable.  First  entry  is  always  made  on  the  credit  side.  (Why?) 
Cr.  side  shows  notes  issued.  Dr.  side  shows  notes  redeemed.  Difference 
shows  notes  outstanding.  Dr.  side  can  never  exceed  Cr.  (Why?)  Notes 
outstanding  are  a  liability. 

Merchandise.  First  entry  must  be  made  on  the  Dr.  side.  (Why?) 
Dr.  side  shows  purchases.  Cr.  side  shows  sales.  Difference  between  the 
two  sides,  (after  inventory  is  entered),  shows  gain  or  loss.  Merchandise 
on  hand  is  always  a  resource. 

Real  Estate.  First  entry  must  be  made  on  the  debit  side.  (Why?) 
Dr.  side  shows  purchases.  Cr,  side  shows  sales,  if  any.  Inventory 
entered  on  credit  side,  then  difference  shows  gain  or  loss.  Real  Estate 
on  hand  is  a  resource. 

Shipments  or  Consignments.  First  entry  must  be  made  on  the  debit 
side.  (Why?)  Dr.  side  shows  market  value  of  the  goods  shipped  away, 
together  with  shipping  charges,  if  such  have  been  paid.  Cr.  side  shows 
net  proceeds  of  sales,  after  expenses  and  commission  have  been  de- 
ducted. If  the  entire  shipment  is  not  sold  the  inventory  should  be  en- 
tered on  the  Cr.  side  as  usual  with  property  accounts.  Difference  be- 
tween the  two  sides  shows  gain  or  loss.     Shipment  on  hand  is  a  resource. 


ACCOUNTS  51 

Personal  Accounts.  Dr.  side  of  a  personal  account  shows  what  the 
person  owes  us.  Cr.  side  shows  what  we  owe  him.  The  difference,  if 
the  Dr.  side  is  larger,  shows  a  balance  due  us, — a  resource.  If  the  Cr. 
side  is  larger  the  difference  shows  a  balance  against  us,  or  a  liability. 

Expense.  Dr.  side  shows  outlays  for  running  the  business.  Credit 
side  shows  any  returns  received  from  items  charged  to  this  account. 
Difference  shows  a  loss  or  gain. 

Thus  if  one  should  sublet  a  part  of  his  store  or  office,  he  should  debit  expense  for 
the  entire  rent  paid  and  credit  expense  for  the  amouno  received.  Expense  may  have  an 
inventory,  as  a  supply  of  coal  on  hand.  The  account  would  then  be  closed  the  same  as 
a  merchandise  account. 

Interest,  Discount  or  Exchange.  The  Dr.  sides  of  these  accounts  show 
what  we  have  paid  out  for  such  items.  The  credit  sides  show  what  we 
have  received  for  such  items.     The  difference  is  a  gain  or  loss. 

Profit  and  Loss.  The  debit  side  shows  our  losses.  The  credit  side 
shows  our  gains.     The  difference  shows  a  net  gain  or  net  loss. 

Proprietor's  Account,  The  credit  side  shows  his  investments,  and 
his  net  profit  after  the  books  are  closed.  The  debit  side  shows  his  with- 
drawals, and  his  net  loss  after  the  books  are  closed.  The  balance  of 
the  account  shows  his  capital  or  insolvency  at  the  close  of  business. 

The  balance  of  the  proprietor's  account,  like  all  other  closing  entries,  is  written  in 
red  ink  on  the  smaller  side.  If  this  balance  occurs  on  the  debit  side  of  the  account  it 
shows  a  net  capital;  if  upon  the  credit,  it  shows  a  net  insolvency. 

WORKING  BALANCE  SHEET 

The  Working  Balance  Sheet  is  a  concise  statement  showing  the  con- 
dition of  the  business  at  the  time  of  closing  the  books.  It  must  exhibit 
in  compact  form  the  resources  and  liabilities  of  the  business;  the  gains 
or  losses  for  a  preceding  period,  and  the  net  capital  or  net  insolvency 
of  the  concern.  It  is  made  up  from  the  Trial  Balance  and  inventories, 
by  extending  the  differences  into  their  proper  columns.  This  Working 
Balance  Sheet,  shows  the  ledger  as  it  will  apper  after  it  is  closed.  As 
its  name  indicates,  it  is  usually  made  out  by  the  bookkeeper  before  he 
closes  the  ledger,  as  an  aid  in  closing  and  as  a  safeguard  against  error. 
The  bookkeeper  takes  the  differences  as  shown  on  his  Working  Balance 
Sheet,  direct  to  the  various  ledger  accounts,  as  closing  entries. 

This  form  of  balance  sheet  has  been  extensively  used  by  bookkeepers  as  an  exhibit 
of  the  business  to  be  submitted  to  the  proprietors  or  officers  after  the  books  are  closed. 
The  usage  appears  to  be  changing  in  favor  of  the  financial  statement,  {shown  later),  as  a 
form  better  adapted  to  that  purpose  while  the  Working  Balance  Sheet  is  retained  as  a 
convenience  in  closing  the  ledger. 


52 


THEORY  OF  BOOKKEEPING 


"^^i^nyj"//^/- 


Balances  Brought  Down.  If  the  business  is  to  be  continued,  it  will  be 
necessary  to  bring  the  balances  down  in  the  ledger  accounts  beneath  the 
rulings,  changing  sides  in  black  ink.  Date  the  balances  brought  down 
Feb.  1. 

It  is  well  to  lake  a  trial  of  the  balances  brought  down,  so  as  to  make  sure  that  none 
have  been  overlooked,  and  that  your  ledger  is  in  balance  before  beginning  the  next 
month's  business. 


ACCOUNTS  53 


LESSON  XVII 
COPARTNERSHIP 

The  student  will  proceed  to  journalize  the  following  transactions: 

191.. 

Feb.  1.  Charles  H.  Wilson  and  Henry  Duncan  have  this  day  formed  a 
copartnership  for  the  purpose  of  conducting  a  retail  and  whole- 
sale grocery  business,  partners  to  share  gains  and  losses 
equally.  The  firm  name  and  st^^le  to  be  Wilson  &  Duncan. 
Charles  H.  Wilson  invests  his  present  stock  of  goods  valued  at 
$2500.  Store  fixtures  and  leasehold  of  store  room  $350.  Horse 
and  wagon  $150. 
Henry  Duncan  invests  cash  $3000. 

*'  1.  Paid  cash  for  postage  and  expenses  of  printing  and  mailing 
circular  letters  to  customers  and  others  notifying  them  of  the 
new  firm,  $8.40. 

**    2.       Bought  of  Sprague,  Warner  &  Co.,  for  cash,    20   brls.    winter 
wheat  flour  @  $4.87i,  $97.50;  10  brl&.  Graham  flour  @  $4.62i 
$46.25;  24  sacks  Buckwheat  flour,  65  lbs  each  @  4c  lb,    $62.40 
20  cases  rolled  oats  @  $2.75,  $55;  2  brls.  cube  sugar  at  $9,  $18 
Total  $279.15. 

*'    3,       Paid  cash  for  rent  of  store  for  current  month,  $35. 

"  4.  Sold  to  A.  C.  Nelson  on  30  days,  100  cartons  Japan  type  rice 
3  lbs.  each  @  8c,  $24;  5  cases  domestic  macaroni  @  $1.87i, 
$9.36;  2  sacks  California  lima  beans  @  $6.25,  $12.50.  Total 
$45,86. 

"  5.  Bought  of  W.  M.  Hoyt  &  Co.,  on  30  days,  10  cans  Sorghum  mo- 
lasses 10  gal.  ea.@  $4,  $40;  12  cases  MacLaren's  Imperial  cheese 
$3.25,  $39;  5  cases  Edam  cheese  @  $9.50,  $47.  $50;  20  boxes  Pre- 
mium chocolate  @  $3,  $60.  Total  $186.50.  Paid  cash  for 
freight  $6.30  and  cartage  $1.75. 

"  7.  Shipped  to  Davis  &  Moore,  commission  merchants,  St.  Louis, 
for  sale  on  our  account  and  risk,  60  brls.  winter  apples  @  $3, 
$180.     Cartage  paid  in  cash  $4.50.     Total  $184.50. 


ti 


54  THEORY  OF  BOOKKEEPING 

191.. 

Feb.  8.  Sold  to  A.  C.  Nelson  on  30  days,  4  boxes  Premium  chocolate 
@  $3.60,  $14.40;  5  cans  Sorghum  malasses  @  $5,  $25;  100  lbs. 
cut  loaf  sugar  @  3c,  $3;  5  cases  silver  leaf  lard,  @  $7.50, 
$37.50;  1  brl.  refiner's  syrup  $10.     Total  $89.90. 

"    10.     Henry  Duncan  has  withdrawn  for  private  use,  cash  $10. 

**  11.  Bought  for  cash,  3  tons  of  coal  for  heating  the  store,  at  $7.50, 
$22.50. 

11.  Sold  Henry  M.  Hudson  on  account,  5  cases  Egg  0-C  corn  flakes 
toasted  @  $3,  $15;  3  cases  silver  leaf  lard  @  $7,  $21;  7  cases 
Domestic  macaroni  @  $2,  $14;  26  pkgs.  rolled  oats  @  8c,  $2.08. 

Total  $52.08. 

12.  Sold  to  C.  B.  Mitchell,  LaSalle,  111.,  on  30  days,  10  doz.  cove 
oysters  @  $1,  $10;  1  brl.  blood  red  salmon  @  $20;  3  brls.  Ice- 
land herring  @  $12,  $36;  1  brl.  cube  sugar  @  12;  180  lbs.  cut 
loaf  sugar  @  3c,  $5.40;  78  cartons  Japan  type  rice  3  lb.  ea.  @ 
8c,  $18.72;  20  sacks  Buckwheat  flour  @  $3,  $60.  Total  $162.12. 

12.  Received  of  C.  B.  Mitchell,  LaSalle,  111.,  his  note  at  30  days 
to  apply  on  account  for  $81  06. 

14.     Received  cash  of  Henry  M.  Hudson  on  account,  $25. 

"  14.  Sold  to  the  Palmer  Hotel  Co.  on  account,  10  cases  rolled  oats 
$3,  $30;  5  cases  Egg  0-C  corn  flakes  toasted  @  $3,  $15;  10  brls. 
winter  wheat  flour  @  $5,  $50;  5  brls  Graham  flour  @  $5,  $25; 
1  brl.  cube  sugar  @  $12.     Total  $132. 

*'  15.  Bought  of  J.  C.  Bradford,  Corona,  Cal.,  on  30  days,  100  boxes 
California  cluster  raisins  @  $2,  $200;  50  boxes  oranges  @  $3, 
$150.     Total  $350. 

"  15.  Bought  of  A.  W.  Wheeler  &  Co.,  on  30  days,  30  cases  Diamond 
brand  coffee  @  $13.25,  $397.50;  50  boxes  imported  Malaga 
raisins  @  $3.50,  $175;  10  brls.  white  distilled  vinegar  @  $7.50, 
$75.     Total  $647.50. 

'''  16.  Paid  Santa  Fe  Railroad  Co.,  cash  for  freight  on  invoice  of 
raisins  and  oranges  received  from  J.  C.  Bradford,  Corona,  Cal. 
$67.30. 

"    16.     Sold  Siegel,  Cooper  &  Co.  for  cash,  50  boxes  oranges  @  $4.30, 

$215. 

"  17.  Accepted  A.  W.  Wheeler  &  Co's.  draft  on  us  at  30  days  sight, 
favor  Citizens  Bank  for  $300. 


<( 


( ( 

18, 

(( 

19, 

(( 

23. 

(( 

24. 

ACCOUNTS  55 

191.. 

Feb.  17.  Shipped  to,  Watson  &  Son,  commission  merchants,  Minneap 
olis,  Minn.,  for  sale  on  our  account  and  risk,  100  boxes  Cali- 
fornia cluster  raisins  @  $3,  $300.  Cartage  paid  in  cash  $2.50. 
Total  $302.50. 

Received  of  Davis  &  Moore,  St.  Louis,  an  account  sales  of  our 
shipment  of  Feb.  7j  showing  net  proceeds  $234.60. 

Sold  to  Watson  &  Whitaker  on  account,  3  sacks  California  lima 
beans  @  $7.50,  $22.50;  10  brls.  winter  wheat  flour  @  $5.25, 
$52.50;  10  cases  rolled  oats  @  $3,  $30.     Total  $105. 

Paid  house  rent  of  Chas.  H.  Wilson  by  check  on  flrm's  bank 
account,  $25. 

Sold  J.  W.  Douglas,  Macomb,  111.,  on  60  days,  2  cases  Dia- 
mond brand  coffee  @  $15,  $30;  5  boxes  Premium  chocolate  @ 
$4,  $20;  3  cans  Sorghum  molasses,  10  gal.  each  @  $5.25,  $15.75; 
6  cases  MacLaren's  Imperial  cheese  @  $4.20,  $25.20.  Total 
$90.95. 

"  25.  Sold  H.  E.  Jackson,  Rockford,  111.,  on  30  days,  5  brls.  winter 
wheat  flour  @  $5,  $25;  3  brls.  Graham  flour  @  $4.75.  $14.25;  6 
boxes  fancy  California  prunes,  25  lbs.  each  @  16c,  $24;  1  brl. 
molasses,  Sugarland  brand  @  $8.     Total  $71.25. 

' '  26.  Bought  of  Sprague,  Warner  &  Co. ,  5  cases  silver  leaf  lard  @ 
$6,  $30;  10  cases  Egg  0-C  corn  flakes  toasted  @  $2.75,  $27.50; 
20  cases  rolled  oats  @  $2.85,  $57;  10  cases  Saratoga  chip  po- 
tatoes @  $2,  $20;  20  brls.  winter  wheat  flour  @  $4.75,  $95;  10 
100  lb  sacks  barley  flour  @  $4.75,  $42.50;  8  half-chests  Gun- 
powder tea  @  $14,  $112;  5  half -chests  Y.  H.  tea  $12.50,  $62.50. 
Total  $446.50.  Gave  in  payment  one  half  cash,  balance  our 
note  at  30  days  with  6%  interest. 

"  27.  Watson  &  Whitaker  claim  a  shortage  of  one  case  of  rolled  oats 
in  our  sale  of  the  19th,  which  we  allow,  at  $3,  and  credit  their 
account. 

"    27.     Received  of  Palmer  Hotel  Co.,  on  account,  cash  $50. 

"  28.  Sold  A.  E.  Barker,  Elkhart,  Ind.,  on  his  60  days  note,  20  brls. 
winter  wheat  flour  @  $5,  $100;  5  cases  Diamond  brand  coffee 
@  $17.50,  $87.50.     Total  $187.50. 

"  28.  Paid  cash  for  the  following  items:  Postage  stamps  $2;  adver- 
tising in  the  News  $15;  repairs  to  window  shades  $1.60;  print- 
ing and  stationery  $13.25.     Total  $31.85. 


56 


THEORY  OF  BOOKKEEPING 


DIRECTIONS 

After  journalizing  the  foregoing  transactions  proceed  to  post  your 
journal  to  the  ledger.  In  opening  ledger  accounts,  allow  Chas.  H.  Wil- 
son 8  lines;  Henry  Duncan  10  lines;  Bills  Receivable  10  lines;  Bills  Pay- 
able 10  lines;  Cash  one  page;  Merchandise  30  lines;  Expense  12  lines; 
Fixtures  8  lines;  Horse  and  Wagon  8  lines;  A.  C.  Nelson  8  lines;  W.  M. 
Hoyt&Co.  8  lines;  Shipt.  Davis  &  Moore,  St.  Louis,  8  lines;  Henry  M. 
Hudson  8  Unes;  C.  B.  Mitchell,  LaSalle,  111.,  8  lines;  Palmer  Hotel  Co.  8 
lires;  J.  C.  Bradford,  Corona,  Cal.,  8  lines;  A.  W.  Wheeler  &  Co.  8  lines; 
Shipt.  Watson  &  Son,  Minneapolis,  8  lines;  Davis  &  Moore,  St.  Louis,  8 
lines;  Watson  &  Whitaker  8  lines;  H.  E.  Jackson,  Rockford,  111.,  8  lines; 
Profit  &  Loss  10  lines. 


LESSON  XVIII 


CLOSING  FEBRUARY 


Footing.  Add  the  debits  and  the  credits  of  each  account  in  the  ledger, 
and  with  a  sharp  pencil  write  the  totals  in  small,  distinct  figures  be- 
neath the  columns  added. 

Trial  Balance.  Proceed  to  take  off  a  Trial  Balance  of  all  the  accounts 
in  the  ledger,  which  should  correspond  with  the  following: 

Trial  Bat.ance,  Feb.  28,  191.. 


1 

Chas.  H.   Wilson 

2:>  1 

3000 



1 

Henry  Duncan 

10 

3000 

,/ 

Cash 

32'.H) 

716 

50 

Merchandise 

44SS 

1631 

66 

■  ' 

Bills  Receivable 

Bills  Payable 
Fixtures 

Horse  and  Wagon 
Expense 
A    C.  Nelson 
W  M.  Hoyi  db  Co. 
Shipt.  Davis  dt  Moore,  St.  Louis 
Henry  M.  Hudson 
C.  B.  Mitchell,  LaSalle,  Til. 
Palmer  Hotel  Co. 
J.  C.  Bradford,  Corona,  Cal. 
A.   W.   Wheeler  d-  Co. 
Shipt.  Watson  d:  Son.  Minneapolis,  Minn. 
Davis  &  Moore,  St.  Louis 
Watson  &  Whitaker 
J.   W.  Douglas,  Macomb,  HI 
H.  E.  Jackson,  Rockford,  Lll. 

1 

lom 

07 

10U9 

07 

ACCOUNTS 


57 


Inventory.  Having  the  Trial  Balance  correct,  the  next  step  will  be 
to  take  inventories  of  all  property  on  hand,  of  every  kind.  These  will 
show  the  following:  Merchandise  $3318.43;  Shipment  to  Watson  &  Son, 
Minneapolis  S310;  Fixtures  $345;  Horse  and  Wagon  $145;  2  tons  Coal  for 
Store,  @  S7.50,  S15.00. 

Working  Balance  Sheet.  Our  ledger  is  now  in  balance,  as  shown  by 
the  trial  balance,  and  we  have  inventories  of  all  goods  and  property  re- 
maining on  hand.  The  next  step  will  be  to  make  out  a  "Working  Bal- 
ance sheet"  from  which  to  close  the  ledger. 


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58  THEORY  OF  BOOKKEEPING 


LESSON  XIX 

CLOSING  FEBRUARY— CONTINUED 

Enter  Inventories.  With  our  Working  Balance  Sheet  as  a  guide,  we 
will  begin  the  process  of  closing  the  ledger  by  entering  first  the  inven- 
tories in  their  respective  accounts.  On  the  credit  side  of  each  account 
having  an  inventory,  enter  the  amount  of  such  inventory  in  red  ink, 
under  the  date  of  the  last  day  of  the  month  "By  Balance,"  as  though 
the  goods  were  sold  for  that  amount. 

Close  All  Accounts  Except  Partners.  Begin  with  the  first  account  in 
the  ledger  after  those  of  the  partners,  and  close  each  by  entering  the 
difference  between  the  two  sides  in  red  ink,  on  the  smaller  side.  Finan- 
cial accounts  close  "To"  or  "By  Balance,"  while  revenue  accounts  close 
"To"  or  "By  Profit  and  Loss."  (see page  4.6)  The  Loss  &  Gain  columns 
in  our  Working  Balance  Sheet  show  the  revenue  accounts,  and  the  Re- 
source &  Liability  columns  show  the  financial  accounts.  Transfer  all 
Profit  &  Loss  red  ink  entries  to  the  Profit  &  Loss  account,  changing 
sides. 

Close  Profit  &  Loss  Account.  Find  the  difference  between  the  two 
sides  of  this  account,  which  will  show  the  net  gain  or  net  loss  of  the 
business.  In  this  case  it  is  a  net  gain.  Since  Wilson  &  Duncaa  are 
equal  partners,  divide  the  net  gain  (or  loss)  into  two  equal  parts  and 
enter  each  partner's  share  separately  in  the  Profit  &  Loss  account,  in 
red  ink,  "To"  or  "By"  the  partner's  name,  the  same  as  shown  by  the 
Working  Balance  Sheet,  and  transfer  the  accounts  to  the  opposite  side 
of  the  partners'  accounts  respectively. 

Close  Partners'  Accounts.  Close  each  partner's  account  "To"  or  "By 
Balance"  the  same  as  any  financial  account. 

Ruling  and  Footing.  Rule  up  all  accounts  in  your  ledger,  place  the 
footings  in  the  rulings,  and  bring  the  balances  down  beneath  the  rulings, 
preparatory  for  a  continuation  of  the  business. 

Financial  Statement.  In  order  to  exhibit  the  condition  of  the  business 
to  the  members  of  the  firm  in  clear  and  concise  form  we  will  now  pre- 
pare a  statement  of  resources,  or  assets,  and  liabilities,  for  that  purpose, 
known  as  a  Financial  Statement 


59 


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60  i^CCOUNTS 


LESSON  XX 
BUSINESS  CONTINUED,— MARCH 

191.. 

Mar.  1.  Chas.  H.  Wilson  has  this  day  retired,  having  sold  his  interest 
in  the  business  to  Henry  Duncan  who  will  continue  under  his 
individual  name. 

Debit  one  partner  and  credit  the  other,  for  the  amount  of  the  retiring    part- 
ner's interest  in  the  business,  as  shown  by  his  ledger  account. 

"  1  The  price  agreed  upon  to  be  paid  by  Henry  Duncan  to  Unas. 
H.  Wilson  for  his  interest  in  the  business  is  $2750,  payable 
cash  $1250;  note  due  in  6  mos.  $750;  note  due  in  one  year  $750, 
both  notes  to  bear  6%  interest.  Henry  Duncan  therefore  with- 
draws the  necessary  cash  and  notes  from  the  business. 

^'     1.       Paid  cash  for  rent  of  store  for  month  in  advance,  $35. 

'"     2.       Received  cash  of  Henry  M.  Hudson  in  full  of  account,  $xx.xx. 


(( 


3.  Bought  of  Sprague,  Warner  &  Co.,  5  brls.  cut  loaf  sugar  @ 
$11.50,  $57.50;  8-100  lb.  drums  cube  sugar  @  7c  lb.  $56;  10  brls. 
XX  powdered  sugar  @  $14.25,  $142.50;  1  doz.  cans  refiner's 
syrup  10  gal.  ea.,  per  can  $3.25,  $39.  Total  $295.  Paid  them 
cash  in  full,  less  2%  cash  discount,  $5.90. 
Credit  "Cash  Discount"  for  this  item  of  $5.90. 

*'  5.  Received  of  Watson  &  Son,  Minneapolis,  Minn.,  an  account 
sales  of  our  shipment  of  California  raisins  showing  net  pro- 
ceeds, $374.80,  which  they  have  placed  to  our  credit. 

*•     6.       Received  of  Palmer  Hotel  Co.,  their  check  in  full  of  account, 

$xx. 

"  7.  Discounted  at  First  National  Bank,  A.  E  Barker's  note  dated 
Feb.  28.  Face  of  note  $187.50,  discount  off  $1.60.  Proceeds 
received  in  cash  $185.90. 

"  7.  Paid  cash  to  W.  M.  Hoyt  &  Co.  in  full  for  their  bill  of 
$186.50. 


THEORY  OF  BOOKKEEPING  til 

191.. 

Mar.  8.  We  have  purchased  the  lot  and  store  building  which  we  oc- 
cupy, No.  79  E.  Main  St.,  from  the  owner,  Mrs.  W.  J.  Law- 
son  on  the  following  terms  and  conditions: 
Consideration  $4500.  We  assume  the  mortgage  now  on  the 
property  amounting  to  S2000,  bearing  5%  interest  due  in  3 
years.  We  pay  cash  $1000.  We  give  three  notes  for  $500 
each,  due  in  3,  6  and  9  months  with  6%  interest,  secured  by 
second  mortgage  on  the  property. 

''  8.  We  received  a  cash  refund  of  $25  for  rent  paid  beyond  the 
date  of  this  purchase. 

Credit  Real  Estate  for  this  rebate,  and  not  Expense  account.  When  an 
owner  occupies  a  store  he  should  charge  up  the  rent  to  Expense  account 
every  month,  the  same  as  though  the  building  was  owned  by  some  other 
person. 

"  9.  Received  of  A.  C.  Nelson  his  check  for  $89.90  in  full  of  our  bill 
of  Feb.  8. 

Along  with  the  check  came  the  following  order,  which  we  im- 
mediately fill:  8  boxes  fancy  California  prunes,  25  lbs.  ea.  @ 
20c,  $40;  12  cases  Egg  0-C  corn  flakes  toasted  @  $3.20,  $38.40; 
2  cans  Sorghum  molasses  10  gal.  ea.  @  $4.50,  $9;  1  brl.  white 
distilled  vinegar  @  $8.75;  5  cases  silver  leaf  lard  @  $8,  $40. 
Total  $136.15. 

"  10.  Received  of  J.  W.  Douglas,  Macomb,  111.,  his  check  to  apply 
on  acconnt,  $50.     Exchange  on  this  check  15c  we  lose. 

"  10.  Sold  Lewis  M.  Wood,  4  brls.  winter  wheat  flour  @  $6,  $24;  6 
brls.  Graham  flour  @  $6.30,  $37.80;  4  sacks  Buckwheat  flour, 
65  lbs.  each  @  4c,  $10.40;  10  cases  rolled  oats  @  $3.50,  $35;  10 
cases  Saratoga  chip  potatoes  @  $2.40,  $24.  Total  $131.20. 
Received  in  payment  cash,  less  2%  off  as  cash  discount  $2.62. 
Debit  "Cash  Discount." 

"  12.  C.  B.  Mitchell,  LaSalle,  111.,  having  gone  into  bankruptcy,  we 
have  compromised  our  claim  at  35c  on  the  dollar.  He  owes 
us  on  note  $81.06,  and  on  open  account  $81.06.  Received  from 
his  assignee  in  full  settlement,  cash  $xx.xx. 

"  13.  Sold  J.  W.  Douglas,  Macomb,  111.,  5  brls.  XX  powdered  sugar 
@  $18,  $90;  5  sacks  barley  flour,  100  lbs.  ea.  @  $4.80,  $24;  2 
brls.  cut  loaf  sugar  @  $15,  $30;  4  brls.  Iceland  herring  @ 
$12.50,  $50.  Total  $194.  Received  in  payment  his  note  at  30 
days,  $100,  balance  on  account. 


62  THEORY  OF  BOOKKEEPING 

191.. 

Mar.  14.     Received  cash  of  Watson  &  Son,  Minneapolis,  Mich.,    for  net 
proceeds  of  shipment  of  prunes,  $374.80. 

"     14.     Paid  cash  to  J.  C.  Bradford,  Corona,  Cal.,    in   settlement   for 
our  purchase  of  Feb.  15,  $350. 

"     15.     Paid  A.  W.  Wheeler  &   Co.    cash   for  balance   due   them   on 
purchase  of  Feb.  15.,  $xxx. XX. 

**     15.     Received  cash  of  Davis  &  Moore,  St.  Louis,  in  full  of  account 
$xxx.xx. 

*'     16.     Paid  cash  to  Walter  Driscoll  for  repainting   our   store  front, 
labor  and  materials,  $11.40. 
Debit  Real  Estate. 


16.  Henry  Duncan  has  withdrawn  cash  for  private  use,  $2 

17.  Paid  Citizens  Bank  cash  for  our  acceptance  due  this  day, 
given  for  account  of  A.  W.  Wheeler  &  Co.,  $300. 

19.  Received  of  Watson  &  Whitaker   to   apply   on   account,    cash 

$75. 

20.  Sold  H.  E.  Jackson,  Rockford,  111.,  on  30  days,  10  cases  rolled 
oats  @  $3.60,  $36;  5  sacks  barley  flour,  100  lb.  each  @  $5,  $25; 
5  drums  cube  sugar,  1001b.  each  @  9ic,  $47.50;  6  cans  refiner's 
syrup,  10  gal.  each  @  $4.25,  $25.50.     Total  $134. 

22.  Sold  to  Henry  W.  Fowler  for  cash,  less  2%  cash  discount,  2 
brls.  molasses,  Sugarland  brand  @  $10,  $20;  6  cans  refiner's 
syrup,  10  gal.  each  @  $4.50,  $27;  3  half -chests  Y.  H.  tea  @ 
$15,  $45;  3  half-chests  Gunpowder  tea  @  $16,  $48;  25  boxes 
imported  Malaga  raisins  @  $4,  $100.  Total  $240.  2%  cash 
discount  $x.xx. 

23.  Paid  A.  W.  Dickson  county  collector,  cash  for  taxes  on  our 
store  building  and  lot  amounting  to  $38.40,  also  taxes  on  our 
stock  of  goods  $16.50. 

Debit  Real  Est-^te  and  Expense. 

24.  Received  of  H.  E.  Jackson,  Rockford,  IlL,  casn  to  apply  on 
account  $50,  and  a  request  for  a  few  days  further  time  on  the 
balance. 

28.  Paid  cash  for  our  note  favor  Sprague,  Warner  &  Co.,  with  in- 
terest, due  this  day.  Face  of  note  $223.25,  Interest  $1.12. 
Total  $224.37. 


ACCOUNTS  63 

191.. 

Mar.  28.     Sold  to  F.,  E.    Hess  on  his  60  days   note,    6%,    3-100  lb. 

drums  cube  sugar  @  9c,  $27;  3  brls.  cut  loaf  sugar  @  $15,  $45; 

5  brls.  XX  powdered  sugar  @  $18,  $90.     Total  $162. 

' '  28.  Have  this  day  subscribed  for  5  shares  of  stock,  par  value  $100 
per  share,  in  the  new  bank  being  organized  in  this  neighbor- 
hood, to  be  called  the  Merchants  and  Farmers  Bank.  Paid 
cash  for  the  first  installment  amounting  to  $100. 

"  29.  Sold  M.  C.  Butler,  10  cases  Saratoga  chip  potatoes®  $1.85, 
$18.50;  50  boxes  oranges  @  $3,  $150;  10  cans  Sorghum  mo- 
lasses.   10  gal.  each  @  $4,  40.     Total  $208.50,  net  cash. 

"     30.     Paid  adv.  bill  in  The  Record  in  cash,  $6.30. 

"    31.     Paid  cash  for  months  salary  to  John  Larson,  clerk,  $50. 

31.     Paid  cash  for  Henry  Duncan's  subscription  to  the  Benevolent 
Society,  $10. 


(( 


DIRECTIONS 

After  journalizing  the  month  of  March,  proceed  to  open  new  accounts 
for  any  new  names  that  may  appear  upon  the  books,  allowing  each  8 
lines. 

Post  up  your  ledger.  Check  tlie  accounts  to  see  that  your  posting 
is  correct.  Foot  the  accounts  neatly  with  a  sharp  lead  pencil.  Take  a 
trial  balance.    You  find  that  you  have  the  following: 

Inventory  of  Property  on  Hand,  March  31,  191.. 

Merchandise '. $2725.00 

Real  Estate 4500. 00 

Merchants  and  Farmers  Bank  Stock 100.00 

Fixtures 340.00 

Horse  &  Wagon 140.00 

Make  a  Working  Balance  Sheet. 

Close  the  ledger  accounts  from  the  Working  Balance  Sheet,  make 
out  a  Financial  Statement,  which  should  show  Henry  Duncan's  net  cap- 
ital, at  the  close  of  businessto  be $3422.79. 


64  THEORY  OF  BOOKKEEPING 


QUESTIONS  FOR  REVIEW 


1.  Define  an  account.     On  which  side  are  the  debits  entered? 

2.  What  is  the  ledger,  and  why  is  it  useful  or  necessary  in  every  set  of  books? 

3.  What  is  meant  by  "opening  an  account?" 

4.  Define  "posting." 

5.  In  what  order  of  precedence  are  ledger  accounts  usually  opened? 

6.  What  is  "post  marking"  and  its  object? 

7.  What  is  meant  by  "checking"   and  why  is  it  necessary. 

8.  Define  "footing"  and  explain  how  it  is  done. 

9.  What  is  a  "Trial  Balance?" 

10.  Does  the  trial  balance  prove  the  ledger  to  be  correct?    Why? 

11.  What  is  the  object  of  "closing"  a  ledger  and  of  what  does  it  consist? 

12.  What  two  classes  of  accounts  have  we?    Name  them  and  define  each. 

13.  How  are  Financial  Accounts  closed? 

14.  How  are  Revenue  Accounts  closed,  if  they  have  an  inventory?     How  in  case    of   no 

inventory? 

15.  What  is  an  Inventory,  how  taken,  why  necessary? 

16.  At  what  price  are  goods  supposed  to  be  inventoried? 

17.  Can  you  have  an  inventory  of  Expense?    How? 

18.  Can  you  have  an  inventory  of  Interest?    How? 

19.  What  does  the  debit  side  of  a  personal  account  show?     Credit  side?     Difference? 

20.  What  is  the  object  of  a  profit  and  loss  account,  how  is  it    made    up   and   how    is   it 

closed? 

21.  What  is  a  "Working  Balance  Sheet,"  and  why  is  it  useful? 

22.  What  does  the  "Financial  Statement"  show? 

23.  Where  do  you  look  in  order  to  determine  whether   a   business    is   profitable,    or  is 

"making  money?" 

24.  If  you  saw  the  business  was  losing  money  where    would   you  look    to   discover   the 

cause? 

25.  Where  would  you  look  to  ascertain  the  capital  or  insolvency  of  a  business? 


CASH  AND  TRADE  DISCOUNTS 


65 


CASH  AND  TRADE  DISCOUNTS 


A  Trade  Discount  is  a  percentage  reduction  taken  from  a  bill  when 
goods  are  sold.  Frequently  two  or  more  discounts  are  taken  from  the 
same  bill,  as,  5  or  40,  20  and  5. 

In  many  lines  of  business,  especially  manufacturing,  a  "list  price"  or  catalogue 
price  is  published,  and  discounts  are  allowed  according  to  conditions  of  the  market  or 
cost  of  material.  If  the  market  fluctuates,  the  discounts  are  changed,  while  the  list  price 
remains  the  same. 

Suppose  a  manufacturing  concern  is  selling  an  article  40  per  cent,  off  from  the 
list  price.  If  the  buyer  orders  the  goods  for  export  to  a  foreign  country,  he  may  be 
given  an  extra  discount  of  perhaps  20  per  cent.  This  is  to  encourage  foreign  trade. 
For  a  specially  large  order  he  may  be  given  an  additional  discount  of  5  per  cent,,  making 
40,  20  and  5  off. 

In  figuring  discounts,  take  off  the  first  discount,  then  compute  the  second  discount 
on  the  remainder.     Compute  the  third  after  the  second  is  deducted,  etc. 

Statement.    A  Statement  of  Account,  commonly  called  a  "statement" 
consists  of  a  list  of 
purchases   together 
with    payments     or 

credits,  if  any,  dur-  O"^^^^-  ^^^"   -^^^^^^  /^    i^i    _ 

ing  a  given  time, 
usually  the  previous 
month. 


MONTHLY  STATEMENT 

STATEMENT 


If  bills  have  been 
furnished  the  buyer 
at  the  time  of  the  pur- 
chases, only  the  totals  of 
the  bills  need  be  shown 
in  the  statement,  but  if 
the  purchaser  has  not 
had  bills  of  the  various 
purchases,  the  statement 
should  contain  a  detailed 
account  of  the  goods 
sold,  prices,  etc.  In  case 
payments  have  been 
made  or  credits  allowed, 
these  should  be  shown 
on  the  statement. 

Statements  should  be 
rendered  promptly  at 
the  close  of   the  month. 


In  Account  with. 

Excelsior  Manufacturing  Co. 

Manufacturers  of  Plumbers'  Supplies 


Tenni    Net  30  dayi.  3%  10  days 


J^Ln^^ 


<sr 


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66 


THEORY  OF  BOOKKEEPING 


Cash  Discount  is  an  allowance  in  cash  made  for  the  payment  of  a  bill 
within  a  specified  time. 

Goods  are  sold  on  a  definite  term  of  credit,  such  as  30  days  or  60  days,  or  4  months, 
etc.  At  the  end  of  that  time  the  bill  is  "net"  and  must  be  paid  in  full.  But  the  buyer 
may  have  the  option  of  paying  within  the  first  ten  days  or  other  period,  and  receiving  a 
special  "cash  discount."  The  statement  would  then  bear  the  following:  * 'Terms  30 
days;  2  per  cent.  10  days''  or  "Terms  4  mos;  3  percent.  30  days. 

BANK  DRAFT 


c.^^^€^^C^^/m/.^^^  I^^  K^,    /f  /      Ma. 


\^.v<r 


^ttfti  i  Utkmfi'4'.txi'*Zo  Ztftt 


■:^7/{i 


Remittances.  In  payment  of  obligations  through  the  mails  it  is  im- 
proper to  send  personal  checks  long  distances.  For  payments  at  long 
distances  send  either  bank  drafts,  or  if  the  amounts  are  small,  postofiice 
or  express  money  orders.  The  draft  or  money  order  should  be  made 
payable  to  the  person  sending  the  remittance,  and  by  him  endorsed  in 
full,  tc  the  person  or  firm  to  whom  the  remittance  is  to  be  made.  In 
this  method  the  draft  shows  that  it  has  passed  through  the  hands  of  the 
remitter. 

ENDORSEMENT 


A  personal  check  is  only  supposed  to  circulate  in  the  immediate  vicinity  where  it  is 
?iven,  while  bank  drafts  and  money  orders,  being  issued  by  institutions   of  known  re- 


CASH  AND  TRADE  DISCOUNTS  67 

sponsibility  are  acceptable  anywhere.  Personal  checks  on  distant  banks  are  also  subject 
to  a  small  charge  for  collection,  called  exchange.  Many  western  firms  who  purchase  of 
eastern  manufacturers,  and  hence  have  occasion  to  make  frequent  payments  in  the  East, 
keep  accounts  in  eastern  banks  so  that  they  may  make  remittances  by  their  own  checks. 
The  check,  draft  or  money  order  may  be  merely  enclosed  with  the 
statement,  or  a  formal  letter  may  accompany  it. 

FORM  OF  LETTER  ENCLOSING  REMITTANCE 


A.    M.    ^VORTHlNGTO.V    &    BrO. 
FLUMBrSG,    GAS    FITTING 

SEWKRING  /y  y. 


Chicago, ^|(4.ij<<<^:?^^  xj?^  loi 


yez.<d^^ 


68  THEORY  OF  BOOKKEEPING 


TO  THE  STUDENT 


You  have  now  learned  how  to  open,  post  and  close  a  ledger,  the 
meaning  of  the  various  accounts  in  their  relation  to  the  business,  and 
the  facts  shown  by  them.  It  is  from  the  ledger  that  the  proprietor  or 
manager  of  a  business  seeks  the  information  which  is  to  guide  him  in  the 
conduct  of  his  affairs. 

You  have  learned  to  take  a  trial  balance  and  make  out  a  balance 
sheet  and  a  financial  statement.  These  show  at  a  glance,  the  business 
as  it  stands.  Every  word  and  figure  conveys  a  meaning,  and  must  be 
thoroughly  understood. 

You  have  also  learned  something  of  trade  and  cash  discounts  so 
generally  used  in  business.  You  are  now  prepared  to  take  up  some  of 
the  methods  and  forms  emplified  in  every  day  business,  as  will  be  pre- 
sented in  the  lessons  which  follow. 


SINGLE  ENTRY — RETAIL 


LESSON  XXI 

SINGLE  ENTRY— RETAIL 
Changed  to  Double  Entry. — Loose  Leaf  System 

In  Single  Entry  accounts  are  kept  in  the  ledger  with  persons  only, 
the  object  being  to  show  our  relation  to  those  with  whom  we  transact 
business. 

Since  in  single  entry  every  debit  does  not  have  a  corresponding  credit,  a  trial  bal- 
ance cannot  be  taken,  and  the  gains  and  losses  must  be  ascertained  by  relying  upon  in- 
ventories and  other  information  not  contained  in  the  books. 

Retailers  and  small  tradesmen  find  the  simplicity  of  single  entry  well 
adapts  it  to  their  purposes. 

Agents,  trustees,  administrators  of  estates  and  all  those  who  are  charged  with  the 
collection  and  disbursement  of  money,  belonging  to  others,  find  single  entry  a  satisfactory 
method  of  keeping  accounts. 

Retail  Grocery  Business.  To  exemplify  the  keeping  of  accounts  by 
the  single  entry  system,  the  retail  grocery  business  is  here  selected. 
An  Order  Book,  Day  Book,  Cash  Book,  and  Ledger  will  be  kept. 

Order  Book.  Formerly  this  was  a  small  book  of  long  and  narrow 
proportions,  sometimes  called  a  "counter  book,"  and  in  it  were  entered 
the  orders  as  received.  If  the  order  was  paid,  the  entry  was  so  marked, 
and  no  posting  done  to  the  ledger;  but  if  not  paid,  the  customer's  ac- 
count was  charged. 

At  the  present  time  retailers  use  small  books  or  pads,  provided  with 
duplicate  order  blanks  and  a  carbon  sheet  for  duplication.  Upon  these 
are  written  with  pencil,  the  name  and  address  of  the  customer,  articles 
and  extensions  of  prices.  These  pads  are  used  by  the  clerks  behind  the 
counter  as  well  as  the  order  takers  who  call  on  customers. 

As  the  articles  are  put  up  for  delivery  they  are  checked  off  in  the  margin  of  the  or- 
der pad,  extended  and  a  total  found. 

The  original  order  is  retained  by  the  dealer,  while  the  duplicate  is  delivered  to  the 
purchaser  with  the  goods.  The  original  blanks  are  kept  on  file  according  to  date  or  in  en- 
velope* according  to  the  name  of  the  customers.  If  a  ledger  is  kept,  the  accounts  of  the 
customers  are  charged  from  the  original  order. 


70 


THEORY  OF  BOOKKEEPING 


ORDER  PAD 

FISCHMANN'S 
GROCERY  AND  MARKET  HOUSE 

PURVEYORS  OF  HIGH  GRADE 

MEATS  AND  GROCERIES 

6226-0228  evanston  avenue 

Telephone  Edgewater  2797-3981  Chicago,  III 191.. 

Sold  to 


Schmaueh 


AiJt. 


Address 


6305  May  St. 


Envelope  System.     If 

the  Envelope  System  is 
used,  an  envelope  is  made 
out  for  each  customer 
who  buys  on  credit,  and 
these  are  filed  in  an  up- 
right position  in  a  tray 
in  alphabetical  order.  As 
the  slips  are  handed  to 
the  cashier  or  b o o k- 
keeper  by  the  clerk,  the 
total  is  entered  on  the 
outside  of  the  envelope 
and  the  slip  placed  inside 
as  a  detailed  record  of 
the  charge.  Payments 
are  credited  on  the  en- 
velope as  made. 

Some  firms  notably  those 
operating  department  stores, 
have  order  pads  with  a  re- 
capitulation in  the  cover. 
Each  day  at  the  close  of  the 
business  the  salesmen  are  re- 
quired to  add  up  their  total 
sales  and  turn  in  their  books. 

In  small  stores  it  is  not  customary  to  make  out  regular  bills  for  cash  sales,  the  clerks 
being  provided  with  small  slips  consecutively  numbered,  on  which  is  noted  simply  the 
amount  of  the  purchase.  The  customer  takes  this  slip  to  the  cashier  who  files  it  on  a 
spindle.  From  these  slips  the  cash  sales  for  the  day  are  ascertained  and  entered  by  total 
in  the  Cash  Book. 

Day  Book.  The  Day  Book  is  a  history  of  the  operations  of  the  busi- 
ness, in  narrative  form.  In  a  single  entry  system,  the  terms  Dr.  and 
Cr.  are  used  to  indicate  whether  a  person  is  to  be  charged  or  cred- 
ited. Impersonal  transactions  may,  or  may  not,  be  entered  in  the  Day 
Book.  From  the  Day  Book  we  post  directly  to  the  Ledger,  thus  do- 
ing away   with  the  Journal. 

It  was  formerly  customary  to  copy  all  bills  sold  to  customers  into  the  Day  Book, 
but  present-day  duplication  methods  have  supplanted  this  practice  and  avoided  the  great 
loss  of  time  incident  thereto. 

Cash  Book.    The  Cash  Book  when  operated  in  a  single  entry  system 

differs  from  its  use  in  double  entry  only  in  one  respect;  it  is  auxiliary,  not 

being  posted  from.    Its  purpose  is  merely  to  keep  a  convenient  record  of 

the  cash  received  and  paid  out,  and  a  check  upon  the  daily  cash  balance. 

For  more  detailed  explanation  of  the  cash  book  see  pages  76  and  77. 


1    1 

W.  Butter 

33 

2      1 

lb.  Coffee 

35 

3      1 

Bread 

05 

4   1-2 

pk.  Pot. 

25 

5      1 

lb.  Onions 

05 

6      1 

H.  C.  Flour 

18 

7      3 

bun.   Carrots 

15 

8      1 

bx.  Berries 

10 

9 

$1 

46 

10 

SINGLE  ENTRY — RETAIL 


71 


Loose  Leaf  Ledger.  A  loose  leaf  ledger  is  one  consisting  of  ledger 
ruled  sheets  arranged  in  alphabetical  or  numerical  order  in  a  binder. 
The  loose  leaf  is  particularly  adapted  to  personal  accounts. 

The  primary  object  of  the  loose  leaf  system  of  accounting  is  the  elimination  of  all 
surplus  or  inactive  accounts,  and  to  this  end  the  accounts  are  divided  into  "Cnrrent  Ac- 
counts" and  "Transferred  Accounts,"  a  separate  binder  or  ledger  being  kept  for  each. 

Current  Accounts  are  kept  in  the  current  binder,  which  is  so  made  up 
that  CLch  account  sheet  is  separate  and  independent,  making  it  possible 
to  remove  or  transfer  any  account  at  pleasure.  Index  leaves  are  inter- 
spersed throughout  the  book  followed  by  the  accounts  in  the  same  order 
for  easy  reference. 

Transferred  Accounts  are  those  which  have  been  closed,  and  also  in- 
cludes the  filled  sheets  of  active  accounts  which  have  been  forwarded. 

These  are  placed  in  the  transfer  binder  in  the  same  position  which  they  occupied  in 
the  current  binder.  Where  an  account  covers  a  number  of  sheets,  these  should  be  kept 
together  in  the  transfer,  thus  making  all  transactions  of  every  customer  accessible  for 
future  reference. 

The  posting  to  a  loose  leaf  ledger  does  not  differ  from  posting  to  a  book  ledger,  but 
where  the  account  sheets  are  not  numbered,  a  check  (V)  mark  is  placed  in  the  folio 
column  of  the  book 

The  Card  Ledger.  A  card  ledger  has 
been  defined  as  a  cabinet  of  accounts 
kept  on  cards,  standing  on  edge,  and 
arranged  alphabetically  or  numerically. 
The  same  principles  which  apply  to  the  loose 
leaf  system  govern  the  card  system.  Usually 
only  personal  accounts  are  kept  in  these  cabinets, 
one  card  being  devoted  to  each  account.  Thf 
same  classification  of  current  and  transfer  is 
made  as  in  the  loose  leaf  system. 

DIRECTIONS 


Proceed  to  write  the  following 
transactions  in  the  Day  Book,  using  the  form  on  page  73.  If  cash 
has  been  received  or  paid  out,  this  should  be  carried  to  the  Cash  Book, 
as  shown  on  pages  74  and  75.  Study  carefully  the  explanations  given 
beneath  the  Cash  Book  forms.  Open  accounts  in  the  General  Ledger, 
allowing  each  account  one  third  page:  {your  name),  J.  P.  Shaw,  Mer- 
chandise, Furniture  and  Fixtures,  Horse  and  Wagon,  Auto  Truck,  Bills 
Receivable,  Reid,  Murdock  &  Co.,  Steele,  Wedeles  &  Co.,  W.  M.  Hoyt 
&  Co.,  American  Cereal  Co.,  Chicago  Biscuit  Co.,  Sexton  &  Co.,  C.  Jevne 
&  Co. ,  Cuneo  &  Garabaldi,  Aetna  Insurance  Co.,  Cash  Discount,  Ex- 
pense and  Loss  &  Gain.  In  the  Card  Ledger  you  will  open  accounts  for 
customers  as  the  sales  occur. 


72  THEORY  OF  BOOKKEEPING 

TRANSACTIONS 

191.. 

Sept.  1.       I  have  this  day  embarked  in  the  Retail  Grocery   business   at 
2205  Adams  Street,  City,  with  an  investment  of  $4000.00  in 

cash. 

Make  two  D.  B.  entries,  one  a  memorandum  entry,  the  other  an  entry  cred- 
iting yourself  for  the  investment.     {See  form,  page  73) 
Also  enter  the  investment  in  the  0.  B.     {See  form,  page  74) 
Post  from  D.  B.  to  your  credit  in  the  general  ledger. 

*'      1.       Rented  store  at  above  address  of  George  Brown,  for   1   year 
at  $30  per  month,  payable  in  advance.     Paid  month's  rent  by 

by  check. 

D.  B.  and  C.  B.     {See  form,  page  75) 

"  2.  Made  the  following  purchases  today,  to  make  up  a  full  line  of 
goods  for  the  store:  Reid.  Murdock  &  Co.,  City,  2%,  10 days, 
$146.20;  Steele,  Wedeles&  Co.,  City,  2%,  15  days,  $392.45; 
W.  M.  Hoyt  &  Co.,  City,  $793.51,  3%  cash.  Paid  last  bill  in 
cash,  less  discount. 
D.  B.,  C.  B.  and  L. 

NOTE.— Make  one  D.  B.  entry  for  all  the  purchases,  crediting  each  firm 
and  post,  and  another  debiting  W.  M.  H.  &  Co.,  for  the  payment  and  post 
the  cash  and  the  discount  as  separate  items  to  their  account.  Enter  full 
amount  of  W.  M.  H.  &  Go's.,  bill  on  credit  side  of  C.  B.  and  cash  discount 
on  debit  side,  as  though  the  entire  amount  had  been  paid  out  and  the 
discount  received  in  return. 

*'     3.       Bought  of  Julius  Bender  &  Co.,  City,  store  fixtures,  for  cash, 
$50. 
1).  B.  and  C.  B. 

4.  Made  the  following  purchases  for  cash: 

Bradner  Smith  &  Co.,  paper  and  bags $8.00 

Geo.  E.  Cole  &  Co.,  account  books 9.80 

Rogers  &  Co. ,  printing  order  blanks 7.50  $25.30 

D.  B.  and  C.  B. 

5.  We  opened  our  store  to  customers  this  morning.     Cash   sales 
for  today  per  cash  drawer  $26.45. 
C.  B. 

Credit  sales  were  made  today  as  follows:  Henry  F.  Dever, 
1745  Madison  St.,  3  bars  American  Family  soap  @  5c;  2  doz. 
eggs  ^  26c;  1  lb.  butter  38c.  S.  H.  Green,  546  Kedzie  Ave., 
5  lbs.  sugar  @  6c;  i  doz.  eggs  @  26c  per  doz;  2  pks.  Uneeda 
biscuit  @  5c;  1  can  baking  powder  10c.  Mrs.  Charles  Ander- 
son, 892  Sacramento  Ave.,  1  pkg.  pepper  25c;  2  lbs.  citron  @ 
7c;  3  lbs.  butter  @  38c;  1  pkg.  figs  10c;  1  bar  toilet  soap  10c; 
2  cans  corn  (^  12c;     2  cans  peaches  @   15c.    Arthur  Zander 


(C 


SINGLE  ENTRY— RETAIL 


73 


A^^-^ 


191.. 
Sept.  5. 


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2307  Washington  Boul.,  2  sacks  table  salt  @  8c;  1  lb.  raisins 
15c;  5  lbs.  dried  apples    @    lie;   3   lbs.    granulated  sugar   @ 
6c;  2  lbs  prunes  @  15c. 

Make  out  Sales  Slips  in  duplicate  for  the  credit  sales  and  have  same  checked 
by  your  teacher.  He  will  retain  the  duplicates  on  behalf  of  the  purchasers 
and  you  will  post  from  originals  directly  to  the  card  ledger.  {See  form, 
page  76) 

Bought  for  cash  of  D.  S.  Jaffray  &  Sons,  one  horse  for  $225; 

and  a  delivery  wagon  of  Studebaker   &  Co.,   for  $165   cash; 

also  of  R.  E.  Race,  for  cash,  1  ton  of  hay  $15   and  10  bushel 

oats,  $4. 

D.  B.  and  C.  B. 

Close  your  cash  book  and  bring  down  the  balance  ($2742.45). 

Cash  sales  today,  $43. 


74 


THEORY  OF  BOOKKEEPING 


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The  left  hand,  or  Dr.  side  of  the  cash  book  is  for  money  received.  Write  first  tlie 
date,  then  the  name  of  the  account  for  which  the  cash  is  received,  follow  this  with  a 
brief  explanation,  and  then  the  amount,  in  the  first  money  column.  The  column  next  to 
the  date  column  is  for  the  ledger  page.  The  explanations  should  be  written  in  a  smaller 
hand  than  the  name  of  the  account,  and  begin  at  a  uniform  distance  on  the  line. 


191.. 
Sept.  8. 


Paid  Harless  &  Co.,  cash  for  premium  on  a  policy  of  $1200  for 
the  year  at  li  per  C,  also   our   clerk,    Edward  Holland,    his 
wages  for  the   past  week,    $12.     Bought  vegetables   of  the 
farmers  today  for  cash;  $19.50. 
Make  one  D.  B.  entry  and  separate  C.  B.  entries. 

Cash  sales  for  today  per  cash  drawer,  $123.75. 

Credit  sales  today:  Henry  F.  Dever,  \  lb.  Japan  tea  @  80c 
per  lb;  2  lbs.  Java  coffee  @  35c;  1  cabbage  15c;  2  pks.  pota- 
toes @  20c;  3  qts.  beans  @  20c;  2  lbs.  onions  @  5c;  1  broom 
45c.  S.G.  Ort,  1162  Troy  St.,  5  lbs.  C.  butter  @  36c;  1  lemon 
extract  10c;  2  doz.  eggs  @  26c;  2  pks.  apples  @  35c;  1  pkg. 
shredded  cocoanut  10c;  1  box  berries  14c;  4  lbs.  sugar  @  8c. 
Sales  slips,  and  C,  L. 

Purchased  goods  for  the  store  as  follows:      American  Cereal 
Co.,  net  10  days,  $34.75;  Chicago  Biscuit  Co.,  2%  10  days,  net 
15  days  $15.50;  Reid  Murdock  &  Co.,  2%  10  days,  net  15  days, 
$125.80.     W.  M.  Hoyt&  Co.,  3%  cash,  $85.60. 
D.  B.  and  L. 

Cash  sales  today  per  cash  drawer,  $78.50. 

C.  B. 

Paid  bill  of  W.  M.  Hoyt  &  Co.,  i:)urchased  today,  less  cash 
discount. 

D.  B.,  C.  B.  and  L. 


SINGLE  ENTRY — RETAIL. 


75 


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The  right  hand  or  Cr.  side  is  used  for  payments  of  cash.  The  entries,  of  date,  ac- 
count, explanation  and  a,mount  are  made  exactly  as  they  are  upon  the  Dr.  side.  The 
right  hand  column  on  both  the  Cr,  and  Dr.  sides  is  used  for  totals.  The  difference  be- 
tween the  two  sides  should  be  entered  in  red  ink  and  represents  the  money  on  hand. 
The  cash  book  is  ruled  up  when  closed,  the  same  as  an  account  in  the  ledger.  The  bal- 
ance is  brought  down  in  black  ink  on  the  Dr.  side  in  the  total  column. 


191.. 
Sept.  9. 


10. 


Also  paid  for  drayage  on  goods  received  today,  $3. 

C.  B. 

Withdrew  for  private  use,  cash  $25. 

D.  B  ,  C.  B.  and  L. 

Credit  sales  today:  S.  H.  Green,  1  pkg.  bird  seed  @  20c;  2 
bunches  asparagus  %  22c;  1  pkg.  matches  25c;  4  bars  A.  F. 
soap  @  5c;  3  pks.  potatoes  @  14c;  3  pkgs.  Quaker  oats  @  10c; 
2  cans  salmon  @  25c.  A.  E.  Busse,  1827  Lake  St.,  2  doz. 
eggs  @  26c;  5  lbs.  G.  sugar  @  5c;  1  wash  board  35c;  2  lbs. 
starch  @  5c;  i  pk.  apples  @  30c  per  pk;  2  lbs.  coffee  @  35c. 
Sales  Slips  and  L. 

Paid  Andrew  Seng  for  putting  in  additional  fixtures   $303.75. 

C.  B. 

Mrs.  Chas.  Anderson  has  returned  2  cans  of  peaches  bought 
by  her  on  the  5th  instant. 

D.  B.  and  C.  L. 

Credit  sales:  Henry  F.  Dever,  3  pkgs.  soda  crackers  @  10c; 
2  lbs.  starch  @  5c;  2  qts.  oysters  @  37ic;  2  gals.  K.  oil  @  20c; 
1  bu.  potatoes  85c;  5  lbs.  oatmeal  @  6c;  2  cabbages  @  18c. 

Bought  of  Sexton  &  Co.,  invoice  of  goods  amounting  to 
$175.60,  gave  cash  for  one-half;  balance  on  account  at  10  days. 
Cash  sales  today  $146.50. 


76 


THEORY  OF  BOOKKEEPING 


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191.. 
Sept.  10. 


Received  of  S.  H.  Green  cash  in  full,  and  of  Henry  F.  Dever 
$5  on  account. 

D.  B.,  C.  B.  and  C.  L,  Close  Green's  account.  An  account  in  the  Card 
Ledger  is  closed  by  ruling  double  lines  across  the  entire  account,  directly 
beneath  the  last  entry.     No  footings  are  necessary. 

Cash  sales,  $65.10. 

Credit  sales:  John  H.  Huell,  2322  Van  Buren  St.,  6  lbs. rais- 
ins @  13c;  1  broom  55c;  1  vanilla  extract  25c;  2  lbs. 
Santos  coffee  @  33c;  2  cakes  chocolate  @  30c.  Mrs.  Chas.  An- 
derson, 1  lb.  Japan  tea  50c;  2  pkgs.  Uneeda  biscuit  @  10c;  1 
can  peaches  @  28c;  2  boxes  sardines  @  18c;  1  brl.  Ceresota 
flour  $7.  S.  G.  Ort,  3  lbs.  honey  @  32c;  2  bu.  potatoes  @  75c; 
5  lbs.  lard  @  17c;  \  lb.  cream  cheese  @  24c;  \  gal.  vinegar  @ 

42c  per.  gal;  1  brl.  Pillsbury  flour  $6. 

Note:  The  use  of  sales  slips  may  here  be  discontinued,  if  thought  advisable, 


to  save  time. 


(( 


11.     Bought  vegetables  and  produce  of 
$9.75. 
C.  B. 


farmers   today  for  cash, 


Bought  of  C.  Jevne  &  Co.,  City,  an  assortment  of  high  class 
goods  for  our  special  trade,  1%  5  days,  $232.25. 
D.  B.  and  L. 


SINGLE  ENTRY — RETAIL  77 

191.. 

Sept.  11.     Credit  sales:     Mrs.    Charles  Anderson,  1  2  lb.  can  blueberries 
19c;  1  2i  lb.  can  raspberries  30c;  1  brl.  Pillsbury  flour  $6.50; 

2  cans  French  peas  @  25c;  1  jar  orange  marmalade  23c;  2 
pkgs.  Nabiscos  @  15c.  A.  E.  Busse,  4  pkgs.  Graham  crack- 
ers @  10c;  1  pkg.  Saratoga  flakes  15c;  1  brl.  Gold  Medal  flour 
$7;  1  6  lb.  pkg.  Silver  Gloss  starch  @  9c  per  lb.;  2  cakes  Ivory 
soap  @  7c;  6  cakes  Naptha  soap  @  5c;  1  pkg.  lemonade  straws 
85c.  John  H.  Huell,  1  bunch  onions  5c;  2  lbs.  butter  @  38c;  1 
box  berries  14c;  i  pk.  potatoes  @  80c  per  bu.;  2  lbs.  Domino 
sugar  @  7c;  3  doz.  eggs  @  22c;  2  lbs.  egg  biscuits  @  20c;  1 
lb.   ginger  wafers  19c.     Arthur  Zander,  i  doz.  eggs  @    22c; 

3  bars  A.-F.  soap  @  5c;  1  can  tomatoes  15c;  1  bunch  celery 
6c;  2  lbs.  Gunpowder  tea  @  60c;  5  lbs.  Arabian  Mocha 
coffee  @  39c;  1  bx.  sardines  24c. 

Cash  sales  today,  $44.85. 

*'     12.     Withdrew  for  private  use  cash  $12,  and  goods,  $3.50. 
D.  B.,  C.  B.  and  L. 

Cash  sales,  per  drawer,  $51.60. 

Bought  of  Julius  Bender  &  Co. ,   for   cash,   4   chairs   for   the 
store  at  90c  each. 
D.  B.  and  C   B. 

On  examining  the  goods  received  from  C.  Jevne  &   Co.    yes- 
terday, we  find  the  same  short  one  case  maple  syrup,   billed 
us  at  $3.25.     We  have  charged  the  same  to  their  account. 
D.  B.  and  L. 

Paid  in  cash  bill  of  Reid,  Murdock  &  Co., of  the  2nd  inst.,  less 
2%  discount. 

D.  B.,  C.  B.  and  L. 

' '  13.  M.J.  BUley  has  just  opened  a  restaurant  in  the  neighborhood, 
2200  W.Adams  St.  and  we  expect  to  be  favored  with  his  trade. 
He  will  settle  his  bills  the  first  of  each  month.  He  has  given 
us  the  following  order  which  we  have  filled  and  delivered 
today:  1  carton  Uneeda  biscuit,  12  pkgs.  @  4c  per  pkg. ;  1  gal. 
vinegar  @  50c;  6  cans  peas  @  10c;  10  cans  baked  beans  @  9c; 

4  cans  corn  @  10c;  2  pkgs.  Malta  Vita  @  10c;  10  lbs. 
Navy  beans  @  7c;  5  lbs.  split  peas  @  8c;  5  lbs.  barley  @  6c; 
20  lbs.  Aunt  Jemima  pancake  flour  @  10c;  1  10  lb.  bag  table 
salt  15c  per  bag;  2  pkgs.  tooth  picks  @  10c;  1  bunch  bananas 
$1.20;  6  pkgs.  corn  flakes  @  10c. 


78  THEORY  OF  BOOKKEEPING 

191.. 

Sept.  13.     Paid  cash  for  circulars  to  be  distributed  in  the  neighborhood, 
$4.40. 

C.  B. 

Cash  sales  per  cash  drawer,  $47.17,  in  which  we  find  a   coun- 
terfeit five  dollar  bill. 
Enter  full  amount  on  Debit  side  C.  B  ,  and  $5  on  Credit  side. 

Paid  clerk  hire,  $12  and  withdrew  for  private  use  $25  cash. 

D.  B.,  C.  B.  and  L. 

Bought  for  cash  produce  from  the  farmers,  $17.75. 

Credit  sales:  A.  E.  Busse,  2  bu.  potatoes  @  85c;  1  box  soap 
$3.85;  2  pkgs.  soda  crackers  @  5c;  i  gal.  cider  @  40c  per 
gal.;  2  lbs.  Java  coffee  @  35c;  2  small  brooms  @  20c;  2  bags 
table  salt  @  10c.  S.  G.  Ort,  4  lbs.  Premium  lard  @  15c; 
1  bottle  Snider 's  catsup  13c;  1  can  olive  oil  30c;  1  pkg. 
peppermint  wafers  5c;  i  lb.  Y.  H.  tea  @  80c  per  lb.;  3  lbs. 
Santos  coffee  @  29c.  Miss  Helen  E.  Skinner,  2313  W.  Adams 
St.,  4  doz.eggs  @  22c;  10  lbs.  granulated  sugar  @  6c;  2  pkgs. 
raatches  @  5c;  1  bag  Ceresota  flour  25c;  1  basket  peaches  @  $1; 
1  qt.  cranberries  13c;  i  pk.  apples  @  30c;  2  combs  honey  @ 
25c;  1  bottle  horseradish  20c;  1  tin  plum  pudding  23c;  1  glass 
current  jelly  20c;  3  cans  French  peas  @  23c. 

^'  15.  You  have  decided  to  take  in  J.  P.  Shaw  as  a  partner,  he 
to  invest  cash  equal  to  your  present  net  capital.  Articles  of 
co-partnership  have  been  signed  and  it  is  agreed  that  our 
books  will  be  kept  by  Double  Entry  and  the  new  firm  will  do 
business  under  the  name  of  (Student)  &  Shaw. 
Close  the  cash  book  and  instead  of  bringing  balance  down,  forward  it  to  the 
next  page,  placing  the  amount  in  the  Total  Column.  Submit  on  journal 
paper  a  list  of  accounts  owing  us  entitled  ("Schedule  A")  and  another  list 
of  those  we  owe  entitled  ("Schedule  B"). 

EESULTS 

Cash  on  hand  per  C.  B $2'i72.00 

Accounts  Receivable  per  Schedule  A 78.05 

Accounts  Payable  per  Schedule  B 885.30 

Proprietor's  Net  Investment 3934.50 

Goods  in  Stock,  per  Inventory 1967.32 

Furniture  and  Fixtures 357.35 

Horse  and  Wagon 390.00 

Rent,  paid  in  advance,  15  days  unexpired 15.00 

Insurance  Premiums,  unexpired 17.25 


DOUBLE  ENTRY— RETAIL  79 

CHANGING  FROM  SINGLE  TO  DOUBLE  ENTRY 

To  change  our  books  from  single  to  double  entry  it  will  not  be  nec- 
essary to  disturb  the  accounts  in  the  card  ledger  nor  the  accounts  already 
opened  in  the  general  ledger.  It  is  only  necessary  to  open  such  ad- 
ditional accounts  in  the  general  ledger  as  are  required  to  represent  all 
the  resources  and  liabilities  of  the  firm. 

The  steps  in  making  this  change  are  as  follows: 

1.  Take  an  Inventory  of  all  properties  on  hand  belonging  to  the 
business. 

2.  Make  a  statement  of  resources  and  liabilities,  including  the  pro- 
prietor's account  as  a  liability. 

3.  The  difference  between  the  resources  and  liabilities  in  the  state- 
ment is  the  proprietor's  net  gain  or  loss.  Post  the  net  gain  or  loss  to 
the  proprietor's  account,  closing  the  latter  with  a  balance.  The  balance 
will  be  his  net  capital  or  net  insolvency. 

4.  In  the  general  ledger  open  the  additional  accounts  as  shown 
in  the  statement. 

5.  Take  a  trial  balance,  including  both  ledgers  and  the  cash  bal- 
ance. 


STATEMENT 

Statement  of  condition  of  {your  name),  Retail  Grocer  at  2205  Adams 
St.,  {your  city),  at  the  close  of  business,  September  15,  191.. 


RESOURCES 

Cash  on  hand  per  Cash  Book $2271.80 

Accounts  Receivable  per  Schedule  A 78.15 

Merchandise  per  Inventory 1967.32 

Furniture  and  Fixtures  per  Inventory 357.35 

Horse  and  Wagon  per  inventory 390.00 

Expense  Inventories: 

Rent  paid  in  advance $15.00 

Unexpired  Insurance  Premiums. . . .     17.25 32.25  $5096.87 


LIABILITIES 

Accounts  Payable  per  Schedule  B $  885.30 

{Student's)  Net  Investment $3934.50  $4819.80 

Credit  {Student)  with  Net  Gain $277.07 


80 


THEORY  OP  BOOKKEEPING 


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Items  on  the  Dr.  side  of  the  cash  book  are  posted  to  the  credit  side  of  their  respec- 
tive accounts  in  the  ledger.  In  the  "Mdse.  Sales"  column  are  entered  all  items  of  cash 
sales.  The  total  of  this  column  is  extepded  into  the  Sundries  column  and  posted  to  the 
credit  of  Merchandise  account.  The  items  in  the  Sundries  column  must  be  posted  sep- 
arately. 

In  case  a  note  is  discounted,  always  enter  the  face  of  the  note  on  one  side  of  the  cash 
book  and  the  discount  upon  the  opposite  side.     Postmark  each  item  as  posted. 

Where  considerable  cash  is  handled  it  is  customary  to  close  the  cash  book  daily. 
When  the  trial  balance  is  taken  the  balance  of  the  cash  book  must  be  entered  in  the 
debit  column. 


Prepare  a  statement  in  the  form  given  on  page  79,  copy  into  your 
Statement  Book,  followed  by  Schedules  A.  and  B.,  and  open  accounts 
in  the  General  Ledger  with  the  impersonal  resources  and  liabilities  (for 
which  you  have  already  written  the  headings)  and  post  from  the  statement 
all  accounts  not  checked  out.  Post  net  gain  to  credit  of  your  account 
and  take  a  trial  balance  which  you  will  copy  into  your  Statement  Book. 

The  change  is  now  complete  and  we  will  continue  the  business, 
using  the  Order  Book  as  a  Sales  Book,  and  we  will  retain  the  Cash  Book. 

An  Explanatory  Journal  will  take  the  place  of  the  Day  Book.  The 
Cash  Book  will  be  modified  by  adding  a  Mdse.  Sales  column  on  debit 
side,  and  a  Cash  Discount  column  on  the  credit  side.  Cash  items  will 
now  be  posted  directly  from  the  Cash  Book.  The  Ledgers  will  be  re- 
tained and  a  Statement  Book  added. 


DOUBLE  ENTRY — RETAIL 


81 


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Items  on  the  Cr.  side  of  the  cash  book  are  (ordinarily)  posted  to  the  debit  side  of 
their  respective  accounts  in  the  ledger.  Since  it  is  customary  with  most  firms  to  dis- 
count their  bills,  a  "Cash  Discount"  column  is  desirable.  The  discount  is  entered  in  the 
Cash  Discount  column  and  the  net  amount  of  the  bill  in  the  Sundries  column.  Post  first 
the  cash  discount  to  the  debit  of  the  creditor's  account  in  the  ledger,  then  post  the  actual 
cash  paid. 

AVhen  the  cash  book  is  closed  the  Cash  Discount  column  should  be  footed,  but  the 
total  should  not  be  added  to  the  Sundries  column,  or  carried  into  the  Total  column, 
because  it  is  not  cash  paid  out.  The  total  cash  discount  should  be  credited  to  the  Cash 
Discount  account  in  the  ledger. 


191.. 
Sept.  15. 


16. 


Received  Mr.  Shaw's  check  for  his  investment  equal  to  your 
present  net  capital.  The  partnership  agreement  provides  for 
an  equal  sharing  of  gains  and  losses  and  a  salary  of  $25  per 
week  to  you  as  you  are  to  devote  all  your  time  and  attention 
to  the  business.  The  firm  is  to  endure  for  five  years. 
Memorandum  entry  in  Journal  and  C.  B.  entry.  Open  an  account  with 
Mr.  Shaw  and  post  from  C.  B. 


Payments  received  from  customers: 
Mrs.  Charles  Anderson  on  account, 
S.  G.  Ort  on  account, 
M.  J.  Bailey  in  full  of  account, 

C.  B.  and  post  to  C.  L. 


$10.00 
7.50 

8.63 


82  THEORY  OF  BOOKKEEPING 

191.. 

Sept.  16.  Paid  Steele,  Wedeles  &  Go's  bill  of  the  2nd  inst.  less  dis- 
count offered;  also  discounted  Jevne  &  Go's  bill  of  the  11th 
inst.  less  goods  returned  on  the  12th  inst.,  taking  advan- 
tage of  their  discount  on  the  balance. 

For  the  above  transactions  make  only  C.  B.  entries  and  post  twice  to  each 
personal  account, — once  for  the  discount,  and  once  for  the  proceeds.  In 
recording  disbursements  put  net  amount  in  the  Sunds.  column  and  dis- 
count in  Cash  Discount  column   on  the  same  side  of  the  C.  B. 

Receipts  from  customers  will  be  entered  on  Dr.  side   of   the  C.    B.    in 
Sunds.  column. 

Gash  sales  for  today  $89.65. 

C.  B.,  Mdse,  Sales  column  and  check  the  item  in  Folio  column. 

Received  invoices  of  goods  today  as  follows:     Guneo  &   Gar- 
abaldi,  2%  3  days,  $16.50;  G.  Jevne  &  Go.,  1%  5  days  $44.50; 
Steele,  Wedeles  &  Go.,  3%  10  days,  $125.16;    Sexton   &   Go., 
1%  10  days,  $45.60. 
Journalize  and  post. 

"  17.  Gredit  sales:  Lewis  H.Smith,  3624  VanBuren  St.,1  brl.Gere- 
sota  flour  $7.50;  i  bu.  peaches  $1;  3  lbs.  E.  G.  Butter  @  32c. 
Henry  F.  Dever,  2  lbs.  Santos  coffee  @  30c;  4  doz.  eggs  @ 
26c;  1  doz.  oranges  25c;  5  lbs.  granulated  sugar  @  6c;  1  can 
maple  syrup  30c.  Arthur  Zander,  3  doz.  eggs  @  26c;-  1  lb. 
citron  8c;  1  large  can  baking  powder  25c;  1  box  A.  F.  soap 
$3.85;  2  lbs.  loaf  sugar  @  7c;  1  bu.  potatoes  85c;  1  can  Salmon 
25c;  2  qts.  oysters  @  37ic.  Total  sales  $*.3t*..3f*. 
Dr.  the  customers  in  the  card  ledger  and  journalize  the  total  sales:  "Sales 
Ledger  To  Merchandise,  Credit  sales  per  duplicate  bills  on  file  "  Check 
the  Debit  and  post  the  credit  in  the  general  ledger. 

Gash  sales  per  cash  drawer  $95.81. 
C.  B. 

Paid  out  cash  for  electric  light  $4.50;  advertising  $3.60;    pos- 
tage $1. 
C.  B.  entries  and  post.     Debit  Expense. 

Bought  produce  of  farmers  $13.50. 
C.  B. 
**      18.     Mrs.  Anderson  settled  her  account  to  date,  A.  E.    Busse   has 
paid  $10  on  account,  and  S.  G.  Ort  $5. 
C.  B. 

Discount  invoices  of  Reid,  Murdock  &  Go.,  and  Ghicago   Bis- 
cuit Gompany,  all  of  the  9th  inst. ;  also  settle  invoice  of  Amer- 
ican Gereal  Go.,  of  that  date. 
Sales  per  cash  drawer,  $65.20. 


DOUBLE  ENTRY — RETAIL  83 

191.. 

Sept.  19.  Credit  sales':  Lewis  H.  Smith,  1  bottle  catsup  22c;  2  cans 
sardines  @  14c;  1  large  bottle  Queen  olives  48c;  1  pkg.  cream 
of  wheat  14c;  1  box  Jap.  toothpicks  5c;  2  bars  toilet  soap  @ 
15c.  Henry  W.  Bobbins,  848  N.  Robey  St.,  1  brl.  flour  $7.50; 
5  lbs.  sugar  @  6c;  2  lbs.  E.  C.  Butter  @  32c;  5  lbs.  Java  coffee 
@  30c;  2  bars  Jap  Rose  soap  @  10c. 
Dr.  customers  in  ledger  and  journalize  the  total  credit  sales  of  the  day. 

Sales  per  cash  drawer  $44.65. 

We  have  paid  the  balance  due  on  Jas.  Sexton  &  Go's.,  bill  of 
the  10th  inst.,  of  $***.*4&;  also  bill  of  Cuneo  &  Garibaldi  of 
the  16th  irist.,  less  discount. 

Arthur  Zander  has  given  us  his  30  day  note  at  6%  in  full  of 

account. 

Journal  and  ledger. 

*'  20.  Our  clerk  has  made  out  bills  for  the  following  credit  sales: 
Henry  F.  Dever  $4.62;  S.  G.  Ort  $1.38;  A.  E.  Busse  $4.65;  H. 
W.  Robbins  $3.98;  Charles  W.  Puller,  3600  Van  Buren  St., 
$3.65.     Total  sales  $**.**. 

Charge  them  in  the  Card  Ledger.  Journalize  total  sales  for  the  day  and 
post  credits  to  General  Ledger. 

John  H.  Huell,  one  of  our  customers,    has   gone  into  bank- 
ruptcy.    The  receiver  has  this  day  paid   a   20%   dividend   to 
the  creditors.     The  balance  of  the  account  is  lost. 
C.  B.  and  journal. 

Drew  my  salary  for  the  week,  $25.,  and  paid  the  clerk  his 
wages,  $12. 

Close  your  C.  B.,  post  your  work  and  submit  your  books  with  a  trial  bal- 
ance to  your  instructor. 

"      22.     Discount  the  bill  of  C.  Jevne  &  Co..  of  the  16th  inst.,  at  1%. 
C.  B. 

We  had  a  fire  in  our  store  last  night  and  suffered  a  loss  of 
$398.00  on  our  stock,  and  $150.00  on  fixtures.  We  have  filed 
the  necessary  proofs  with  the  Aetna  Insurance  Company. 

Journal  and  post. 

Ordered  and  received  of  Steele,  Wedeles  &  Co. ,  a  new   stock 

of  goods  for  $1342.20  on  which  we  are  offered  a   special   cash 

discount  of  3%. 

Discount  the  bill  at  once.     Journal,  C.  B.  and  General  Ledger. 

NOTE:    Even  though  this  transaction  is  cash,  it  is  best   to  journalize    the 

sale  so  as  to  show  the  transaction  fully  in  the  ledger. 


84  THEORY  OF  BOOKKEEPING 

191.. 

Sept.  22.     Sales  per  cash  drawer  $39.85. 

"      23.     Bought  new  counters  and  shelves  of  Julius  Bender  &  Co.,  for 

cash,  $285. 

Traded  our  horse  and  wagon  for  an  auto  delivery   truck,    we 
paying  cash  in  addition,  $410. 
Journal  C.  B.  and  General  Ledger. 

Paid  garage  rent  for  the  month,  $5. 

Credit  sales  per  duplicate  sales  slips:   Henry  F.  Dever  $4.80; 
S.  G.  Ort  $6.75;  Lewis  H.  Smith  $3.89;    Henry   W.     Robbins 
$5.30;  Miss  Helen  E.    Skinner,    2313   W.    Adams   St.,   $4.65. 
Total  $**.**. 
C.  L.  and  Journal. 

Sales  per  cash  drawer,  $47.28. 

**      24.     Cash  receipts  from  customers:     Henry  F.  Dever,  on  account, 
$10;  Lewis  H.  Smith  $5;  Chas.  W.  Fuller,  in  full,  $*.**. 
C,  B.  and  C.  L. 

Sold  postage  to  a  customer,  10c. 
C.  B.  and  G.  L. 

Sales  per  cash  drawer,  $56.40. 

The  partners  have  agreed  to  reduce  their  investments   and 
each  has  withdrawn  cash  $1000. 
C.  B.  and  G.  L. 

*'      25.     Arthur  Zander  has  taken  up  his  note.       We   waived   the  in- 
terest. 
C.  B.  and  G.  L. 

Bought  for  cash,  produce  of  farmers,  $15. 

*'      26.     Discounted  bills  of  Sexton  &  Co.,  and  Steele,  Wedeles  &  Co., 
both  of  the  16th  instant. 

Aetna  Insurance  Company  has  remitted  check  in  full  of  our 
fire  loss,  $**.**. 

Cash  sales  for  today,  $41.65. 

Receipts  from  customers:     S.  G.  Ort,  on  account,  $10;  Henry 
W.  Robbins,  on  account,  $15;  Lewis  H.  Smith  in  full  $**.** 

Purchases:     American  Cereal  Co.,  1%  5   days,    net  10   days, 
$65.50;  Chicago  Biscuit  Co.,  2%  10  days,  $18.20;Sexton  &Co., 
1%  10  days,  $226.80. 
Journal  and  G.  L. 


DOUBLE  ENTRY --RETAIL.  85 

191.. 

Sept.  27.      Withdrew  my  salary,  $25.  and  paid  $12  for  clerk  hire. 

Close  your  cash  book.     Post,  rule  up  all  accounts  which  balance,  and  take 

a  trial  balance. 

Enter  the  following  inventories  below  your  trial  balance. 

Merchandise  on  hand,  per  inventory $3232.57 

Furniture  and  Fixtures     "       "         475.00 

Auto  Truck .800.00 

Expense  Inventory 

Unexpired  Insurance 16.50 

Close  your  books  and  make  out  financial   statement,    appending   schedules 
for  Accounts  Receivable  and  Payable.      Student's  net  capital  $3330.36;  J.  P. 
Shaw's  net  capital  $3330.35. 
Submit  all  your  books  for  approval. 


QUESTIONS  FOR  REVIEW 

1.  Define  a  trade  discount  and  state  why  it  is  used.     When  should  it  be  deducted? 

2.  Explain  how  a  discount  of  50,  30  and  20%  should  be  taken  off.     Will   anything   re- 

main of  a  bill  of  $100.00? 

3.  Distinguish  between  a  bill  or  invoice  and  a  statement  of  account. 

4.  What  is  a  cash  discount?    When  should  it  be  deducted? 

5.  When  should  a  monthly  statement  be  rendered  and  what  should  it  show? 

6.  What  is  the  best  form  of  distant  remittance? 

7.  In  making  a  distant  remittance  for  what  two  reasons  is  the  bank    draft    to   be   pre- 

ferred to  the  check? 

8.  In  whose  favor  would  you  buy  a  bank  draft  if  you  were  paying  a   bill    of   a   distant 

creditor? 

9.  What  should  be  done  with  the  draft  in  that  case  before  sending  it  away? 

10.  What  should  accompany  every  check  or  draft  when  remitted? 

11.  What  is  single  entry  bookkeeping? 

12.  Wherein  does  single  entry  differ  from  double  entry? 

13.  To  what  lines  of  business  is  single  entry  adaptable? 

14.  What  is  an  order  book  and  how  is  it  used? 

15.  Explain  the  Envelope  System. 

16.  Define  the  day  book,  and  explain  the  form  of  its  entries. 

17.  How  is  the  cash  book  used  in  single  entry?.     Name  the  different  columns    and   pur- 

pose of  each. 

18.  Explain  how  the  cash  book  is  balanced  up  and  state  what  the  final  result  represents. 

19.  Define  the  loose  leaf  ledger  and  state  the  primary  object  of  the  classification   of  ac- 

counts into  "Current"  and  "Transferred." 

20.  What  is  a  card  ledger? 

21.  What  is  the  object  of  a  special  merchandise  sales  column  on  the  debit   side   of  the 

cash  book?    How  is  it  posted? 

22.  Explain  the  purpose  of  the  cash  discount  column  on  the  credit  side  of  the  cash  book 

and  state  how  its  items  and  totals  are  posted. 

23.  Why  is  no  cash  discount  column  used  on  the  debit  side  of  the  cash  book  in  this  set? 

24.  How  should  cash  discounts  be  entered  when  no  special  column  is  used  in   the   cash 

book? 

25.  What  are  the  five  steps  in  changing  from  single  to  double  entry? 


86  THEORY  OF  BOOKKEEPING 


DUTIES  OF  A  SHIPPING  CLERK 

A  Shipping  Clerk  is  one  whose  duty  is  to  see  that  goods  ordered  by 
customers  are  packed,  classified  and  routed  so  as  to  secure  the  best 
freight  rates,  and  promptly  forwarded. 

In  large  houses  the  shipping  clerk  has  under  his  direction,  packers,  checkers,  truck- 
men and  other  help  that  may  facilitate  in  getting  the  goods  under  way.  He  may  act  as 
stock  clerk  and  have  charge  of  the  actual  filling  of  the  orders.  He  is  then  assisted  by 
others  who  select  and  assemble  the  goods. 

Freight  Classification.  For  the  purpose  of  fixing  the  freight  charges, 
goods  are  assigned  to  certain  classes,  the  rates  varying  according  to  the 
class.  In  making  these  classifications,  railroads  take  into  account  the 
condition  of  the  article,  whether  crude,  rough,  or  finished,  liquid  or  dry, 
knocked  down  or  set  up;  whether  the  article  is  perishable,  the  space  it 
occupies,  its  value,  weight,  etc. 

The  manner  in  which  the  goods  are  packed  for  shipment  frequently  affects  the  class, 
resulting  in  a  higher  or  lower  rate.  Thus,  if  boxed,  the  goods  may  cost  less  to  ship  than 
if  crated.  The  higher  the  class  the  more  the  rate.  The  classifications  are  made  by  com- 
mittees of  railroad  men  and  schedules  of  rates  are  prepared  by  them,  subject  to  revision 
by  the  Interstate  Commerce  Commission,  a  department  of  the  government  which  passes 
on  questions  arising  through  commerce  carried  on  between  the  states. 

The  freight  tariffs  are  kept  on  file  at  each  freight  office,  for  the  information  of  the  public. 

Filling  the  Orders  is  carried  on  in  the  stock  department  unless  there 
is  no  special  department  for  this  purpose. 

Where  the  goods  are  in  different  parts  of  the  establishment  two  copies  of  the  order 
may  be  provided  the  shipping  clerk.  One  of  these  is  cut  into  parts,  the  slips  being  sent 
to  the  stockmen  in  the  different  parts  of  the  house.  Each  stockman  fills  his  part  of  the 
order  and  sends  the  slip  with  the  goods  to  the  shipping  room  where  the  goods  are  assem- 
bled and  checked  against  the  shipping  clerk's  copy  of  the  order. 

Back  Orders  result  from  shortages  encountered  in  the  stock  when  the 
order  is  being  filled.  The  orders  are  filled  as  far  as  possible  and  the  cus- 
tomer advised  that  the  back  order  will  follow  as  soon  as  the  goods  can 
be  obtained.  The  items  which  are  short  should  be  entered  on  a  new  or- 
der, and  are  then  called  a  Back  Order. 

Back  orders  are  issued  in  duplicate,  one  for  the  shipping  clerk,  the  other  for  the  office. 
The  latter  is  to  follow  up  the  order.  When  the  goods  arrive  the  shipping  clerk  is  noti- 
fied at  once,  the  order  is  filled,  and  his  copy  of  the  back  order  is  turned  in  at  the  office. 

Checking  Shipments  is  a  process  for  determining  whether  the  goods 
assembled  in  the  shipping  room  correspond  to  the  customer's  order.  The 
items  are  called  off  by  the  packer  and  at  the  same  time  checked  off  the  or- 


DUTIES  OF  A   SHIPPING  CLERK  87 

der  by  the  checker.  Initials  of  both  should  appear  on  the  shipping  order. 
The  goods  should  be  checked  at  every  stage  of  the  filling  of  the  order,  and  by  every 
one  who  takes  a  part  in  making  it  up,  in  order  to  reduce  complaints  of  shortage  to  the 
minimum.  All  orders  are  properly  routed  before  going  to  the  bill  clerk  or  billing  ma- 
chine operator  for  entry. 

Routing  Shipments  consists  in  determining  the  route  or  railroad  over 
which  the  goods  can  be  shipped  to  best  advantage.  The  rate  between 
two  points  is  not  the  same  regardless  of  route.  One  may  be  shorter 
than  the  other. 

Incases  of  interstate  shipments  the  law  provides  that  the  rate  shall  not  be  higher  for 
the  shorter  of  two  hauls  between  the  same  point.  In  routing,  the  shipping  clerk  should 
also  take  into  account  the  location  of  his  customer  with  reference  to  the  freight  houses 
at  destination,  and  ship  by  the  road  that  will  set  the  goods  down  at  the  most  convenient 
point.  This  will  save  the  customer  on  his  cartage  charges.  If  the  customer  designates 
what  road  he  wants  the  goods  shipped  by,  his  wishes  should  be  carried  out.  In  routing 
the  shipment  a  bill  of  lading  is  made  out  by  the  shipping  clerk. 

A  Bill  of  Lading  is  a  document  which  serves  a  dual  purpose:  First, 
it  is  a  carrier's  receipt  for  the  goods;  second,  it  is  a  contract  to  deliver 
at  destination,  whether  that  point  is  on  the  carrier's  line  or  not. 

Considerable  difficulty  has  arisen  in  the  past  between  carriers  and  shippers  because 
of  the  varying  forms  of  bills  of  lading  in  use.  The  Interstate  Commerce  Commii^ion  cor- 
rected this  evil  by  prescribing  a  uniform  bill  for  all  railroads  in  the  United  States.  Two 
forms  were  prescribed;  a  "straight"  bill  of  lading,  and  an  "order"  bill  of  lading. 

The  Straight  Bill  of  Lading  (non-negotiable)  is  used  in  the  case  of 
ordinary  sales  where  delivery  to  the  consignee  is  not  conditioned  on  pay- 
ment of  the  purchase  price.  This  form  is  prepared  in  triplicate:  First, 
the  Original  Bill  of  Lading,  signed  by  both  shipper  and  carrier,  and  which 
the  consignor  mails  to  the  consignee;  second,  the  Shipping  Order,  or  du- 
plicate, which  is  signed  by  the  shipper  only  and  which  constitutes  the 
railroad  company's  instructions  and  record;  third,  the  Memorandum,  or 
triplicate,  which  is  the  shipper's  record  and  is  signed  by  the  railroad 
company. 

The  Order  Bill  of  Lading  (negotiable)  is  the  second  form  prescribed 
by  the  Interstate  Commerce  Commission.  The  '*order"  bill  of  lading  is 
made  out  to  the  shipper's  own  order,  not  to-the  consignee,  but  the  bill 
of  lading  provides  for  notice  to  the  consignee  of  the  arrival  of  the  goods. 
These  bills  of  lading  may  be  negotiated  by  endorsement  to  the  consignee 
or  other  persons  designated  by  the  shipper,  or  as  is  most  common,  are 
usually  endorsed  by  the  shipper  in  blank.  The  goods  will  only  be  de- 
livered by  the  transportation  company  only  upon  surrender  of  the  bill  of 
lading  properly  endorsed.  In  C.  O.  D.  freight  transactions  the  "order" 
bill  of  lading  is  always  used,  while  in  the  ordinary  credit  sale,  the 
''straight"  bill  of  lading  is  used. 


88 


THEORY  OF  BOOKKEEPING 


Wi>H«rm  Bill  of  Lading-Standard  Form  ol  Straight  Bill  ot  Lading  approved  by  ll>e  Interitat*  Commlrc*  Commission  by  Order  No.  787  of  June  27.  t908. 

Michigan  (Central  T^ailro ad  Company 

Shipper's  No.    ^6874 
Agent's  No ^^^^ 


STRAIGHT   BILL   OF    LADING—ORIGINAL— NOT 
NEGOTIABLE. 


RECEIVED,  subject  to  the  classifications  and  tarriffs  in  effect  on  the  date  of  issue  of  this  Ordinal  Bill  of  Lading, 


at. 


Chicago,    111.   12/27 


.191. 


from  ..Jaine.S  ..Sexton  .&  Co.. the  property  described  below,  in  apparent  good  order,  except  as  noted  (contents  and  condi- 
tion of  contents  of  packages  unknown),  marked,  consigned,  destined  as  indicated  tielow,  which  said  Company  agrees  to  carry  to  its  usual  place  of 
delivery  at  said  destination,  if  on  its  road,  otherwise  to  deliver  to  another  carrier  on  the  route  to  said  destination.  It  is  mutually  agreed,  as  to  each 
carrier  of  all  or  any  of  said  property  over  all  or  any  portion  of  said  route  to  destination,  and  as  to  each  party  at  any  time  interested  in  all  or  anj'  of 
said  property,  that  every  service  to  be  performed  hereunder  shall  be  subject  to  all  the  conditions,  whether  printed  or  written,  herein  contained 
(including  conditions  oa  back  hereof)  and  which  are  agreed  to  by  the  shipper  and  accepted  for  himself  and  bis  assigns. 


The  Rate  of  Freight  frort 

r 

t.n                                                                                                                                                7 

sr  in  Cents  per  100  Lbs. 

IF  Special 
Pet 

IF  Special 

IF.  Times  Isl 

IF  tit  Class 

IF  2d  Class 

IF  Rul«  28 

IF  3d  Class 

IF  Rule  26 

IF  Role  28 

IF  4ili  Class 

IF  Sih  Class    IF  6ib  Class 

Per 

(Mail  .\ddress— Not  for  purposes  of  Delivery  ) 


Consigned  to_ 
Destination — 
Route. 


James  Sexton  L  Co . 


St.   Cloud 


-State  of    Minn . 

-Car  Initial 


-County  of_ 


_Car  No. 


No. 
Packages 

DESCRIPTION   OF  ARTICLES 
AND   SPECIAL  MARKS 

Weight  (Subject  to 
Correction) 

Class  or 
Rate 

Check 
Column 

If  charges  are  to.be  pre- 
paid, write  or  stamp  here, 
"To  be  Prepaid." 

1             "Rx.    r.aTined    Vec-lahl  ps  . 

65 

1 

BX. 

Groceries 

p.9 

1 

Rx. 

Soai) 

6.^ 

' 

to  apply  in  prepayment  of 
the  charges  on  the  property 
described  hereon. 

Aucnt  or  Casfiier. 

Per 

(The  signature  here  acknowl- 
edges  only  the  amount  prepaid.) 

. 

1 

Charges  advanced: 

. 

t 

James   Sexton  F^  Co 


-Shipper. 


P»r      V/.S. 


A.   H.  Hill 


Per- 


-Agent. 


(TbU  BiU  of  lAviing  u  (o  l»e  eigaed  by  the  ShVper  •»<1  Agent  of  the  Carrier  isauuig  same.). 


WHOLESALE  89 

LESSON  XXII 

WHOLESALE 

A  Jobber  is  one  who  buys  and  sells  goods  in  large  quantities. 
The  jobber  usually  buys  direct  from    the   manufacturer,  and  in  turn,  sells  to  the 
wholesaler. 

A  Wholesaler  is  one  who  buys  goods  in  large  quantities  from  the 
manufacturer  or  jobber,  and  sells  in  smaller  quantities  to  retail  mer- 
chants only. 

Since  wholesale  merchandising  usually  embraces  a  considerable  volume  of  business, 
it  requires  a  system  of  records  peculiar  to  itself;  a  system  which,  with  slight  modifica- 
tions, is  used  in  nearly  all  lines  of  that  trade. 

We  have  chosen  the  jewelry  business  as  convenient  to  illustrate  wholesale  account- 
ing in  this  lesson. 

The  Invoice  Book.  Invoices  are  entered  in  the  Invoice  Book,  and  the 
amount  posted  to  the  credit  of  the  person  or  firm  from  whom  bought  in 
the  Purchase  Ledger.  The  total  purchases  for  the  month  is  charged  to 
a  "Merchandise  Purchase  Account." 

Some  firms  post  directly  from  the  original  invoices,  using  a  Recapitulation  Sheet  to 
obtain  the  totals  for  the  month.  The  invoices  are  held  in  a  current  file  until  statements 
of  account  are  received  at  the  end  of  the  month.  They  are  then  checked  off  on  the  state- 
ments and  filed  alphabetically  in  a  file  provided  for  that  purpose.  The  Recapitulation 
Sheet  consists  of  ruled  columns  for  dates  and  amounts,  to  aid  in  totaling  the  business  of 
the  month. 

The  usual  terms  of  manufacturers,  wholesalers  and  jobbers  in  the  jewelry  business, 
are  net  30  days.  Special  arrangements  are  sometimes  made  for  60  days  or  90  days  credit. 
When  a  5  per  cent,  cash  discount  is  quoted,  *'spot  cash"  is  not  meant,  but  the  discount 
may  be  taken  advantage  of  in  30  days. 

The  Purchase  Ledger  contains  only  accounts  of  those  from  whom  we  buy. 
The  aggregate  of  the  accounts  in  the  Purchase  Ledger  is  represented 
by  a"Purchase  Ledger  Controlling  Account"- kept  in  the  generalledger. 

A  loose  leaf  ledger,  (one  sheet  for  each  account)  is  commonly  used  for  the  Purchase 
Ledger,  consisting  of  two  binders, — one  for  current  accounts,  and  one  for  transferred  or 
settled  accounts.  However,  when  the  purchase  accounts  are  not  numerous  they  may  be 
kept  in  the  General  Ledger,  and  that  you  will  do  in  this  set. 

Sales.  The  terms  of  credit  and  payment  on  which  sales  to  retail 
houses  are  made,  vary  somewhat,  but  6%  10  days,  5%  30  days,  3%  90 
days,  net  4  months,  is  common,  and  may  be  considered  "regular." 

In  working  out  this  set,  unless  otherwise  specified,  you  will  make  your  sales  on  these 
terms. 


90 


THEORY  OF  BOOKKEEPING 


Credit  Man.  As  orders  are  received  and  entered,  unless  accompanied 
by  the  cash,  they  are  referred  to  the  ''credit  man"  whose  duty  it  is  to 
pass  upon  the  financial  responsibility  of  customers.  If  he  considers  the 
customer  good,  he  OK's  the  order. 

Order  Register.  All  orders  are  entered  in  an  Order  Register  and  giv- 
en a  number. 

By  this  record  orders  can  be  traced  and  each  one  is  required  to  be  accounted  for.  As 
the  orders  are  filled,  that  fact  is  noted  in  the  register. 

Order  Sheet.  Salesmen  and  customers  are  supplied  with  "Order 
Blanks, "  and  should  any  order  be  in  the  form  of  a  letter,  it  is  transcribed 
on  an  order  blank  for  the  sake  of  uniformity  in  filing. 


Binder  Folio 

JUDSON,  MOORE  &  CO. 

1126 

No.     856 
Date  Sold    ^f^^ 
Town  and  State 
Ship  Via 
Terms    10  days 

CINCINNATI,  OHIO        Salesman  ^  "W^-  Schmauch 

'ch  17,  19—    Sold  to                  Larson  & 
Brookrille,  Ind        p_  Q. 

Son 

Date  Billed 
3-18— 

American  Express               When 

At  once 

Ledger  Filio 

Amount  Enclosed 

Page 

No. 

Quality 
Desired 

NAME  OF  ARTICLE 

Printed 

Catalogue 

Price 

LEAVE 

THIS  COLUMN 

BLANK 

60 

J^510 

1 

Elgin  Movement  18  size  17  jewel  Htg 

20 

00 

61 

1^520 

1 

IS     "    17     "     Htg 

n 

00 

25 

1777 

1 

Boss  18  size  25  yr  Htg  Case 

28 

00 

26 

178Ji. 

1 

Boss  18    "   25  yr  Htg  Case 

28 

00 

168 

k2SJ, 

1 

Signet  Ring  size  8\ 

19 

00 

160 

Ji.250 

1 

"        "9 

15 

00 

ISJf. 

538Jf 

1 

Brooch 

17 

50 

185 

5392 

1 

Brooch 

15 

50 

190 

6301 

1 

Bracelet 

20 

00 

192 

6305 

1 

Bracelet 

10 

00 

302 

8023 

1 

Traveling  Set 

12 

50 

209 

50 

Less  50  and  25% 

130 

H 

78 

56 

1 

When  an  order  has  been  OK'd  by  the  credit  man,  it  is  referred  to  the  buyer  of  the 


WHOLESALE 


91 


house,  so  that  in  case  any  of  the  goods  are  not  in  stock,  they  may  be  ordered  from  the 
manufacturers  at  once.  The  order  sheets  are  next  sent  to  the  different  departments  to  be 
filled.  When  filled  they  are  returned  to  the  office,  amounts  extended,  and  then  are  bound 
together  in  numerical  order  and  posted  directly  to  the  accounts  of  the  customers  without 
journalizing  the  sales.  For  the  purpose  of  obtaining  the  total  sales  recapitulation  sheets 
are  used,  the  form  of  which  would  be  as  follows: 


MONTH  OF. 
SHEET  NO.. 


SALES  RECAPITULATION  SHEET. 


L.  F.- 

L.  P.. 


Date 

Order  No. 

Amount 

/ 

Date 

Order  No. 

Amount 

/ 

Date 

Order  No. 

Amount 

* 

Date 

)rderNo. 

Amount 

/ 

Fofd 

For\l 

For'd 

J 

For'd 

Th^  Bill  and  Charge  System,  or  duplicate  billing  system,  is  used  ex- 
tensively in  wholesale  houses.  An  original  and  duplicate  of  the  bill  are 
made  on  the  typewriter,  the  original  being  sent  to  the  customer,  while 
the  duplicate  constitutes  the  itemized  sales  record,  and  is  preserved  in  a 
sales  binder. 

Unier  this  system  the  bills  are  numbered,  and  posting  is  frequently  done  directly 
from  the  duplicates,  and  not  from  the  order  blanks. 


INVOICE  BOOK 


Date  19 

Inv. 
No. 

LF 

Name                            Address                             Terms 

Amount 

Jan. 

2 
6 
10 

lo 

1 

2 
3 

S.  0.  Bigney  &  Co. 
Jos.  E.  Blake  &  Co. 
B.  F.  Briggs  &  Co. 

Attlehoro,  Mass.   Trade  20%  5/c 
Providence,  R.  I.                   5/c 
Attlehoro,  Mass.  Trade  25%  4 / lOds 

Total  Purchases 

370 

437 
483 

1291 

40 
00 

75 

The  date  should  be  the  date  of  the  invoice  and  not  the  date  of  the  entry.  The 
amount  should  be  entered  after  all  trade  discounts  are  taken  off,  and  before  the  deduc- 
tion of  cash  discounts. 

SALES  BOOK 


H»     1 

.. 

SOLD  TO                                                              I 

T««n 

Date  19 

1           '• 

Name                                 Address 

Terms              | 

Jan. 

8 

l\ 

Larson  &  Son             Brookville,Ind. 

Trade  50  &25%  n/lOds 

78 

56 

i  t 

9 

2 

Birch  Hardware  Co.  Earlmlle,  Ind. 

Trade  50%  6/30  ds 

58 

22 

I  i 

13 

3 

Friest  and  Oeis          Dwight,  III. 

Trade  50%  6 /nc 

138 

21 

When  this  book  is  used,  the  order  blank  or  duplicate  bill  binders  are  auxiliary,  the 
posting  being  done  from  the  Sales  Book.  In  working  out  this  set,  we  will  post  from  the 
Sales  Book  instead  of  from  the  order  blanks,  or  duplicate  bills. 


92 


THEORY   OF   BOOKKEEPING 


Dr. 


CASH 


Hata  IQ 

LF 

ACCOUNT 

SALES  LEDGER 

Sundries 

Name                |             Explanation 

CashDisct. 

Net 

Jan. 

2 

Edwin  B,  North 

Investment 

15000 

(( 

9 

Walter  C.  Fisher 

" 

7663 

n 

(( 

9 

Birch  Hardware  Co . 

On  ace' t.  sale  No.  2 

25 

00 

(( 

IS 

Fries  &  Gets 

Sale  No.  S—6% 

8 

Sh 

ISO 

58 

When  a  customer  pays  a  bill,  or  makes  payment  on  account  without  taking  advan- 
tage of  the  discount,  or  at  too  late  a  date  to  take  advantage  thereof,  the  amount  of  his 
payment  will  be  entered  in  the  "Net  Sales  Ledger"  column  and  posted  to  the  credit 
of  his  account  in  the  Sales  Ledger.  Should  he  take  advantage  of  the  discount  the  amount 
of  such  discount  will  be  entered  in  the  Cash  Discount  column  and  the  net  amount  on  the 
same  line  in  the  Net  column.  In  posting  he  will  be  credited  first  for  the  discount  and 
then  for  the  net  amount.  Receipts  from  all  other  sources  will  be  entered  in  the  Sundries 
column,  and  posted  separately  to  the  proper  accounts  in  the  general  ledger. 

The  total  of  the  Cash  Discount  column  will  be  posted  to  the  debit  side  of  the  Cash 
Discount  Account  and  to  the  credit  side  of  the  Sales  Ledger  Controlling  Account  in  the 
general  ledger,  but  will  not  be  added  to  the  total  receipts  as  it  does  not  represent  receipts 
of  cash.  The  Net  column  will  be  footed  and  the  total  carried  into  the  Sundries  column, 
from  which  it  will  be  posted  to  the  credit  of  the  Sales  Ledger  Controlling  Account. 

BILLS 


Date  Rec'd 
18 

Our 
No. 

LF 

Maker  or  Acceptor 

In  Favor  of 

Where  Payable 

Received  For 

Jan. 

2 

2 

Geo.  F.  Craig  &  Co. 
MilUr,  Walker  &  Co. 

1  Walter  G.  Fisher  \  First  Nat  Bank 
"      j  Our  Office 

W.  G.  Fisher 

The  bill  books  may  be  either  principal  or  auxiliary.  When  the  Bills  Receivable 
book  is  a  principal  book  its  items  are  posted  directly  to  the  credit  of  the  accounts  pro- 
ducing the  notes,  with  the  explanation  "Bills  Receivable  No "      The  footing  being 

posted  to  the  debit  of   Bills  Receivable   account   in   the  ledger,  the   explanation  being 
"Sunds." 

BILLS 


Date  Given 
19 

Our    ,  _ 
No.    LF 

Maker  or  Acceptor 

In  Favor  of 

Where  Payable 

Given  For 

Oct. 
Dec. 

1 
15 

' 

WaUer  G.  Fisher 

First  Nat  Bank 
J.  A.  Stephens 

First  Nat  Bank 
Our  Office 

W.  G.  Fisher 

If  the  Bills  Payable  book  is  a  principal  book  its  items  are  posted  directly  to  the 

debit  of  the  accounts  incurring  the  obligations,  explanation  "Bills  Payable  No ,"  while 

the  total  is  credited  to  the  Bills  Payable  account,  explanation  "Sunds." 


WHOLESALE 


93 


BOOK 


Or. 


ACCOUNT                                        ! 

Cash  Discount 

Name 

Explanation 

^■"""^       on  Purchase      *""""" 

Jan     2 
"     .2 
*'       3 

1^ 

Expense 

S.  0.  Bigney  &  Co. 

8.  0,  Bigney  &  Co. 

Expense 

January  Rent 
Express  on  Inv.  i 
Inv.  No.  1—5% 
Members/lip  in  Dunn's 

150 

18 

52 

1  50 
350  38 

Items  of  expense  are  generally  frequent  and  for  this  reason  a  special  column  is  pro- 
vided for  the  account  on  the  credit  side  of  the  cash  book.  All  items  of  expense  will  be 
checked  in  the  ledger  folio  column  and  the  total  expense  will  be  posted  to  the  debit  of 
the  Expense  account  in  the  general  ledger. 

When  we  pay  for  a  bill  of  goods  and  do  not  take  advantage  of  the  discount,  the 
amount  of  the  payment  will  be  carried  into  the  Sundries  column.  Should  we  take  ad- 
vantage of  the  discount,  however,  the  deduction  will  be  entered  in  the  Cash  Discount 
column,  and  the  net  amount  in  the  Sundries  column.  In  the  latter  case,  two  postings 
will  be  required  to  the  creditors  account  in  the  general  ledger,  one  for  the  discount  and 
one  for  the  cash.  The  footing  of  the  Expense  column  will  be  carried  into  the  Sundries 
column  S3  as  to  be  included  in  the  total  payments,  but  the  footing  of  the  cash  discount 
column  will  not  be  added  to  the  payments. 


RECEIVABLE 


Date  of  Paper 


Time 


Int. 


19     '^«RatB 

Nov.  m  4m    6 
Bee.    13  90ds    - 


WHEN  DUE 


Year 


Face 


Am'tof 
Int. 


500 
I  ^50 


7\50 


50750 


When 


DISPOSED  OF 


How 


1-i 


I)i.sct  at  Bank 


Sight  drafts  should  not  be  entered  in  the  bill  books  but  acceptances  are  entered  the 
same  as  promissory  notes.  As  the  paper  is  paid  that  fact  should  be  recorded  under  the 
head  of  "Disposed  Of"  on  the  rijrht  hand  page.  The  unpaid  notes  should  agree  in  total 
with  the  Bills  Receivable  account. 

PAYABLE 


Uate  of  Paper 


Time 


Int. 


Rate; 

i  "I 

Oct.    I  1    1-10;,  5 

Dec.    \i5\lm\  6 


WHEW  DUE 


Year    i'llgl^fr^l 


1 


Face 


2500 
1000 


Am't  ofji 
Int.   II 


35  07  2535m 


When 


ED 
Ho* 


1-10- 


Paid  in  Cash 


When  the  bill  books  are  treated  as  auxiliary  books,  they  are  not  posted  from,  the 
Qotes  and  acceptances  being  journalized.     Such  will  be  our  method  in  this  set. 


94  THEORY   OF   BOOKKEEPING 

Explanatory  Journal.  Into  this  will  be  entered  all  transactions  of  an 
exceptional  nature,  or  such  as  cannot  well  be  recorded  in  the  other 
books  of  account. 

The  General  Ledger  is  a  book  in  which  the  financial  and  revenue  ac- 
counts of  the  business  are  kept,  not  including,  however,  accounts  receiv- 
able and  payable.     It  is  usually  a  bound  book  in  the  ordinary  ledger  form. 

The  Purchase  Ledger  is  a  record  of  personal  accounts  payable.  Where 
the  accounts  are  not  numerous  they  may  be  kent  in  the  general  ledger, 
otherwise,  it  is  advisable  to  aggregate  them  in  a  purchase  ledger,  keep- 
ing a  *' Purchase  Ledger  Controlling  Account"  in  the  general  ledger. 
Whenever  items  are  posted  to  the  individual  accounts  in  the  purchase 
ledger,  their  aggregate  is  posted  to  the  controlling  account  in  the  gen- 
eral ledger. 

The  difference  between  the  two  sides  of  the  controlling  account  shows  our  aggre- 
gate indebtedness  on  personal  accounts  and  this  difference  should  agree  with  the  total  of 
the  customers'  accounts  in  the  purchase  ledger. 

Inasmuch  as  the  accounts  payable  in  this  set  will  not  be  numerous  we  will  not  use 
the  purchase  ledger  but  keep  such  accounts  in  the  general  ledger. 

A  Sales  Ledger  is  a  book  of  personal  accounts  receivable.  It  is  represent- 
ed in  the  general  ledger  by  a  "Sales  Ledger  Controlling  Account"  which 
is  kept  on  the  same  principle  as  the  Purchase  Ledger  Controlling  Account. 

In  this  set  you  will  keep  the  accounts  of  your  customers  in  a  Sales  Ledger  and  a 
*'Sales  Ledger  Controlling  Account"  in  the  general  ledger. 

LEDGER  HEADINGS 

General:  Edwin  B.  North,  Walter  C.  Fisher,  and  Capital  Stock,  page  1. 
Good  Will,  Organization  Expense,  and  Goods  in  Stock,  page  2.  Furniture 
and  Fixtures,  Catalogue,  and  Bills  Receivable,  page  3.  Bills  Payable, 
Interest  and  Discount,  and  Collection  and  Exchange,  page  4.  Parcel's 
Postage,  Expense,  and  Traveling  Expense,  page  5.  Freight  and  Dray- 
age,  Insurance,  and  Sales  Ledger  Controlling  Account,  page  6.  Carl  H. 
Winter,  Salesman;  Bruce  Mitchell,  Salesman;  Discounts  on  Purchases, 
page  7.  Discounts  on  Sales,  Merchandise  Purchase,  and  Merchandise 
Sales,  page  8.  S.  O.  Bigney  &  Co.,  Attleboro,  Mass.,  Martin-Copeland 
Co.,  Providence,  R.  I.,  and  Goldsmith,  Stern  &  Co.,  New  York,  N.  Y., 
page  9.  S.  &  B.  Lederer,  Providence.  R.  I.,  Waltham  Watch  Co.,  Wal- 
tham,  Mass.,  and  James  E.  Blake  &  Co.,  Providence,  R.  I.,  page  10.  D. 
F.  Briggs  &  Co.,  Attleboro,  Mass.,  Foley  &  Williams  Mfg.  Co.,  Cleve- 
land, Ohio,  and  Koch  Cut  Glass  Co.,  City,  page  11.  Trading  Account, 
Loss  and  Gain,  and  Undivided  Profits,  page  12. 

Sales  Ledger:   To  be  opened  as  required  during  posting. 


WHOLESALE  95 

TRANSACTIONS 

191.. 

Jan.  2.  Edwin  B.  North  and  Walter  C.  Fisher,  have  entered  into  a  co- 
partnership agreement  to  engage  in  the  wholesale  jewelry 
business  at  37  South  Wabash  Ave.,  Chicago.  111.,  under  the 
firm  name  of  "North  &  Fisher."  The  partners  have  agreed 
to  devote  all  their  time  and  attention  to  the  business  and  are 
each  to  receive  a  salary  of  $35.00  per  week  as  managers  of 
the  business. 

The  firm  has  also  engaged  Carl  H.  Winter  and  Bruce  Mitchell  as  traveling 
salesmen  at  $100.00  per  month  each  and  traveling  expenses.  Make  memoran- 
dum entry  in  your  Journal. 

**  2.  Mr.  North  invests  $15000  in  cash  and  checks.  Mr.  Fisher, 
who  has  been  conducting  the  business  as  a  proprietor  at  the 
above  address,  invests  as  follows:  His  stock  of  jewelry  inven- 
toried at  $9780.50;  furniture  and  fixtures  valued  at  $1200;  notes 
as  follows:  One  dated  Nov.  25th  last  year,  due  four  months 
after  its  date,  signed  by  George  F.  Craig  &  Co.,  Forestville, 
Ohio,  for  $500,  with  interest  at  6%;  another  dated  Dec.  12th, 
last  year,  drawn  at  90  days,  signed  by  Miller,  Welker  &  Co., 
Wayneboro,  Pa.,  for  $250  without  interest;  both  notes  have 
been  endorsed  over  to  the  firm  and  are  payable  at  our  place 
of  business;  also  accounts  receivable  as  follows:  Larson  &  Son, 
Brookville,  Ind.,  $224.10;  Seymour  Bros.,  Hamburg,  la.,  $89.50, 
Crandall  Lumber  and  Hardware  Co.,  La  Grange,  Ky.,  $398.25; 
Marseilles  Co.,  Farmersville,  La.,  $144.40;  John  Sedwick, 
Brookston,  Ind.,  $298.14;  Salmon  &  Wilson,  Newport,  N.  H., 
$85.65;  Boe  Bros.,  Findlay,  Ohio,  $414.45;  J.  G.  Bromberg, 
Schuyler,  Neb.,  $125.64. 

The  new  firm  assumes  liabilities  of  Mr.  Fisher,  as  follows:  Mr. 
Fisher's  note  of  $2500.00,  dated  Oct.  1,  last  year,  due  Jan.  10, 
this  year,  interest  5%,  favor  of  and  payable  at  First  National 
Bank,  this  city;  his  note  of  $1000.00  dated  Dec.  15,  last  year, 
due  one  month  after  its  date  with  6%'  interest,  favor  James  A. 
Stephens,  payable  at  our  present  address;  also  the  following 
accounts  payable:  S.  O.  Bigney  &  Co.,  Attleboro,  Mass., 
$865.42;  Martin-Copeland  Co.,  Providence,  R.  L,  $95.80;  Gold- 
smith, Stern  &  Co.,  New  York  City,  N.  Y.,  $18.22;  S.  &  B. 
Lederer  Co.,  Providence,  R.  I.,  $75.50;  Waltham  Watch  Co., 
Waltham,  Mass.,  $1622.60. 
On  the  Craig  &  Co.  note  Mr.  Fisher  is  to  be  allowed  accrued  in-. 


96  THEORY  OP  BOOKKEEPING 

191.. 

Jan.  2.  terest,  while  the  Miller,  Welker  &  Co.  note  is  invested  at  its  face; 
nor  is  any  deduction  to  be  made  on  the  accounts  receivable. 
Mr.  Fisher  is  to  be  credited  for  the  assets  of  the  old  business 
less  the  liabilities  assumed,  and  he  invests  a  cashier's  check 
to  make  his  total  investment  equal  that  of  Mr.  North. 
Gains  and  losses  are  to  be  shared  equally. 

Make  memorandum  entry  in  journal  giving  history  of  this  transaction  in 
narrative  form;  also  make  journal  entry  for  the  debits  and  credits,  including 
the  cash  of  both  partners.  Check  the  cash  in  L.  P.  column  of  the  Journal. 
Make  Cash  Book  entries  for  the  entire  investment  of  Mr.  North  and  for  so 
much  of  Mr.  Pisher's  investment  as  was  cash  and  check  these  two  items  in 
the  L.  P.  column.     Enter  the  notes  in  Bill  Books. 


(( 


2.       Paid  January  rent  in  cash,  $150.00. 


9 


Bought  of  S.  O.  Bigney  &  Company,  Attleboro,  Mass.,  subject 
to  trade  discount  of  20%  and  cash  discount  of  5%,  the  follow- 
ing goods:  3  doz.  Chains,  No.  1425,  @  $12.00  per  doz.;  2 
doz.  Chains,  No.  1427,  @  $18.00  per  doz.;  2  doz.  Chains,  No. 
1465,  @  $19.00  per  doz.;  1  doz.  Chains,  No.  1439i-,  @  $25.00 
per  doz.;  2  doz.  Fobs,  No.  1843,  @  $14.00  per  doz.;  2  doz.  Fobs, 
No.  1739,  @  $16.00  per  doz.;  2  doz.  Fobs,  No.  1743,  @  $18.00 
per  doz.;  2  doz.  Fobs,  No.  1745,  @  $20.00  per  doz.;  1  doz.  Fobs, 
No.  1748,  @  $25.00  per  doz.;  2  doz.  Charms,  No.  2002,  @  $15.00 
per  doz.;  3  doz.  Lockets,  No.  2004,  @  $12.00  per  doz.;  li  doz. 
Lockets,  No.  2006,  @  $8.00  per  doz.;  1  doz.  Brooches,  No.  2008, 
@  18.00  per  doz.;  1  doz.  Scarf  Pins,  No.  2010,  @  $20.00  per 
doz.;  2  doz.  Scarf  Pins,  No.  2013,  @  $12.00  per  doz.;  H  doz. 
Scarf  Pins,  No.  2018,  @  $18.00  per  doz. 

The  numbers  given  in  the  above  purchase  are  the  numbers  by  which  the 
goods  are  designated  in  the  manufacturer's  catalogue.  Pigure  out  this  bill 
(taking  off  the  trade  discount  only)  for  the  purpose  of  ascertaining  the  amount 
to  be  entered  in  the  Sales  Book,  and  then  make  your  Sales  Book  entry.  Bills 
should  always  be  entered  in  the  Sales  Book  after  the  deduction  of  trade  dis- 
count, but  before  the  deduction  of  the  cash  discount. 
Paid  express  charges  on  above,  $1.50.  The  shipper  has  agreed 
to  pay  express  charges  on  shipments  made  to  us. 
Charge  them  with  the  same  on  the  credit  side  of  your  Cash  Book.  This  is 
called  "charging  back"  the  express  charges. 

3.  Settled  invoice  of  S.  O.  Bigney  &  Co.,  of  yesterday,  in  cash 
less  discount  and  express  charged  back. 

Take  otf  the  discount  first,  then  deduct  express  charges  from  net  amount  of  bill, 

4.  We  have  taken  a  membership  in  the  mercantile  agencies,  R.  G. 


WHOLESALE  97 

191.. 

Jan.    4.       Dunn  &  Company,  and  The  Bradstreet  Company,  at  $100  each; 

also  a  membership  in  the  Jewelers'  Board  of  Trade,  $75;  paid 

the  membership  fees  in  cash. 

Make  three  cash  book  eiiiries,  debiting  Expense. 

"     5.       Purchased  of  A.  H.  Andrews  &  Company,  for  cash,  additional 
ofitice  furniture  and  fixtures,  $350;  also  of  Hall  Safe  &  Lock 
Company  for  cash,  four  safes  at  $150  each. 
C.  B.,  two  entries. 

5.       Advanced  our  salesmen  $25.00  each  on  account  of  traveUng 
expenses. 
Debit  each  salesman,  personally. 

*'  6.  Bought  of  James  E.  Blake  &  Co.,  Providence,  R.  I.,  the  fol- 
lowing, less  5%  for  cash:  Two  doz.  Manicure  Sets,  No.  743,  @ 
$12.00  per  doz.;  2  doz.  Desk  Sets,  No.  745,  @  $10.00  per  doz.; 
3  doz.  Manicure  Sets,  No.  748,  @  $9.00  per  doz.;  3  doz.  Tooth 
Brushes,  No.  755,  @  $4.00  per  doz.;  4  doz.  Nail  Files,  No.  756, 
@  $6.00  per  doz.;  4  doz.  Letter  Openers,  No.  758,  @  $12.00 per 
doz.;  3  doz.  Puff  Jars,  No.  842,  @  $24.00  per  doz.;  3  doz.  Cork 
Screws,  No.  845,  @  $9.00  per  doz.;  3  doz.  Bottle  Openers,  No. 
846,  @  $15.00  per  doz. ;  2  doz.  Nail  Pohshers,  No.  875*.  @  $9.00 
per  doz.;  2  doz.  Key  Chains,  No.  878,  @  $15.00  per  doz.;  3  doz. 
Match  Boxes,  No.  880,  @  $24.00  per  doz.;  2  doz.  Cigar  Cutters, 
No.  890,  @  $9.00  per  doz.  Settled  the  bill  in  cash,  less  dis- 
count; also  paid  freight  charges  in  cash,  $3.50. 
Enter  the  purchase  in  invoice  book,  and  the  payment  of  same  on  credit  side 
of  cash  book,  placing  the  discount  in  the  cash  discount  column  and  the  net 
amount  in  the  general  column.  Charge  the  freight  to  Freight  avd  Drayage 
in  C.  B.  The  drayage  we  will  make  no  entry  for  until  we  settle  our  month- 
ly statement  with  the  draying  company. 

8.  Sold  Larsen  &  Son,  Brookville,  Ind.,  less  trade  discount  of  50 
and  25%,  net  10  days,  1  Elgin  Movement  No.  4510,  18  size  17 
jewel  Htg.,  $20.00;  1  Elgin  Movement  No.  452, 18  size  17  jewel 
Htg.,  $24.00;  1  Boss  No  1777,  18  size.  25  yr.  Htg.  Case,  $28.00; 
1  Boss  No.  1784,  18  size  25  yr.  Htg.  Case,  $28.00;  1  Signet  Ring 
No.  4234,  size  8i,  $19.00;  1  Signet  Ring  No.  4250,  size  9,  $15.00; 
1  Brooch  No.  5384,  $17.50;  1  Brooch  No.  5392,  $15.00;  1  Brace- 
let No.  6301,  $20.00;  1  Bracelet  No.  6305,  $10.00;  1  TraveUng 
Set  No.  8023,  $12.50. 

The  order  blank  will  be  extended  by  our  entry  clerk  and  you  will  enter  only 
the  total  of  the  bill  less  trade  discount  in  the  Sales  Book. 

**    8.       The  pay  roll  has  been  made  up  for  the  past  week,  including 


98  THEORY  OF   BOOKKEEPING 

191.. 

Jan.   8.       the  salaries  of  the  partners   and   all  the  employees,  (except 
salesmen  who  will  be  paid  by  the  month)  in  the  time  book. 
The  necessary  currency   and  coin  have  been  drawn  at  the 
bank,  and  all  the  employees  paid  in  cash.     Total,  $351.00. 
Dr.  Expense. 

"     9.       Received  reports  of  traveling  expenses  from  Carl  H.  Winter, 
$13.50;  and  Bruce  Mitchell,  $18.60. 
Dr.  Traveling  Expenses  and  credit  the  salesmen  in  the  journal. 

9.  Sold  Birch  Hardware  Co.,  Earlville,  111.,  subject  to  trade  dis- 
count of  50%,  and  6%  for  cash  30  days,  1  Cut  Glass  Water  Set, 
No.  4032,  $45.00;  1  Cut  Glass  Pitcher,  No.  4040,  $25.00;  1  Cut 
Glass  Mayonnaise  Set,  No.  4045,  $12.50;  1  Bake  Dish,  No.  2509, 
$9.95;  1  Percolator,  No.  2610,  $10.25;  1  Fern  Dish,  No.  2695, 
$13.75.  Cash  $25.00  accompanied  the  order. 
S.  B.  and  C.  B. 

"  10.       Took  up  for  cash  at  First  National  Bank,  note  of  Mr.  Fisher 
assumed  by  the  firm,  $2500.00  with  5%  interest  from  Oct.  1, 
last  year. 
C.  B.  and  B.  B.  ' 

10.  Bought  of  D.  F.  Briggs  Co.,  Attleboro,  Mass.,  the  following 
bill  of  goods  subject  to  trade  discount  25%  and  cash  4%:  2  doz. 
Fobs  No.  96  @  $12  per  doz.;  3  doz.  Fobs  No.  98  @  $9  per  doz.; 
2  doz.  Fobs  No.  93i  @  $15  per  doz.;  2  doz.  Chains  No.  85  @ 
$12  per  doz.;  3  doz.  Chains  No.  87i  @  $18  per  doz.;  2  doz. 
Chains  No.  891  @  $22  per  doz. ;  2  doz.  Dickens  Vest  Chains  No. 
97  @  $12  per  doz. ;  3  doz.  Carmen  Bracelets  No.  104  @  $24  per 
doz.;  4  doz.  Carmen  Bracelets  No.  106  @  $30  per  doz.;  3  doz. 
Carmen  Bracelets  No.  107  @  $28  per  doz. ;  2  doz.  Carmen  Brace- 
lets No.  109  @  $26  per  doz. ;  3  doz.  Chains  No.  110  @  $30  per  doz. 
Paid  express  charges  on  above  $2.25  and  charged  same  back 
to  the  shipper  Settled  invoice,  less  discount  and  express  in 
cash. 

11.  Bought  of  Howe  Scale  Co.,  for  cash,  one  parcel  post  scale  $64, 
and  map  and  book  to  accompany  the  same,  $6.50. 

"  11.  Received  an  order  from  W.  E.  Dorman  of  East  Dubuque,  111., 
for  one  4  drawer  Sewing  Machine  No.  43,  hsted  in  our  cata- 
logue at  $56.50,  less  trade  discount  of  70%  and  subject  to  6% 
for  cash.  As  we  do  not  carry  the  heavy  goods  of  this  charac- 
ter in  stock,  we  have  ordered  the  same  of  the  manufacturers, 


WHOLESALE  99 

191.. 

Jan.  11.  Foley  &  Williams  Manufacturing  Co.,  Cleveland,  O.,  as  per 
their  catalogue  No.  85,  and  have  given  them  directions  to  ship 
directly  to  Mr.  Dorman. 

As  soon  as  the  manufacturers  ship  the  goods,  we  will  be  advised  and  will 
receive  a  bill  from  them.  We  will  then  re-bill  at  our  catalogue  price  less 
discounts,  to  the  purchaser.     No  entry  at  this  time. 

12.  At  the  time  this  concern  was  organized  the  partners  entered 
into  a  contract  with  J.  M.W.  Jones  Stationery  &  Printing  Co., 
for  the  printing  of  our  catalogue.  The  work  is  progressing 
and  we  have  this  day  paid  the  firm  $300  on  account  of  the 
catalogue. 
Debit  Catalogue  Account. 

12.  Received  an  order  for  goods  from  Farmersville  Hardware  Co., 
East  Mohne,  111.  Goods  not  in  stock.  We  have  placed  the 
order  with  Koch  Cut  Glass  Co. ,  City,  and  ordered  them  to  ship 
via  C.  B.  &  Q.  R.  R.,  directly  to  our  customer. 

No  entry. 

12.  Make  the  following  payments  of  cash  on  account:  S.  O.  Big- 
ney  &  Co.,  Attleboro,  Mass.,  $500.00;  Waltham  Watch  Co., 
Waltham,  Mass.,  $500.00.  Settled  the  account  of  Goldsmith, 
Stern  &  Co.,  New  York,  N.  Y.,  in  full  by  New  York  Exchange, 
less  5%  cash  discount. 
C.  B. 

"  13  Sold  Fries  &  Geis,  Dwight,  111.,  less  50%  trade  discount  and 
6%  for  cash,  1  Waltham  Movement  No.  4572,  18  size  17  jewel 
Htg.,  $22.00;  1  Waltham  Movement  No.  4575,  18  size  15  jewel 
Htg.,  $16.00;  1  Crescent  Case  No.  3570,  18  size  Htg.,  25  yr., 
$30.00;  1  Crescent  Case  No.  3572,  18  size  Htg.,  20  yr.,  $24.00; 
1  Gold  Vest  Chain  No.  6085,  14  K.,  $45.00;  1  Gold  Vest  Chain 
No.  6088,  10  K.,  $29.00;  1  Emblem  Charm  No.  2803,  $72.00;  1 
Pr.  Cuff  Buttons  No.  4032,  $5.00;  1-Brooch  No.  3045,  $10.00; 
i  doz.  Collar  Buttons  No.  2210  @  $4.50  per  doz.;  1  Signet  Ring 
No.  1580,  $10.60;  1  LaValliere  No.  2200  @  $4.00;  1  LaValliere 
No.  2210  @  $8.00.  Cash  enclosed  with  order,  less  discount. 
S.  B.  and  C.  B. 

Also  sold  Seymour  Bros.,  Hamburg,  Iowa,  less  trade  40  and 
10%,  and  6%  for  cash  15  days,  1  Pr.  Side  Combs  No.  5310, 
$4.00;  1  Pr.  Side  Combs  No.  5315,  $5.50;  i  doz.  Collar  Buttons 
No.  4022  @  $3.95  per  doz.;  f  doz.  Collar  Buttons  No.  4028  @ 


100  THEORY  OF  BOOKKEEPING 

191.. 

Jan.  13.  $5.75  per  doz.;  1  Hand  Bag  No.  5600,  $18.00;  1  Hand  Bag  No. 
5605,  $20.00;  1  Umbrella  No.  6200,  26  inch,  $22.75;  1  Umbrella 
No.  6205,  28  inch,  $25.00;  1  Toilet  Set  No.  8033,  3-piece,  $15.00;  1 
Toilet  Set  No.  8045,  3-piece,  $13.00;  1  Key  Chain  No.  9032,  $4.00. 
S.  B. 

13.  Received  cash  on  account  from  Crandall  Lumber  and  Hard- 
ware Co.,  $300.00,  Boe  Bros.,  $250.00;  Salmon  &Wilson,  $25.00. 
C.  B. 

13.  Paid  out  cash  for  parcels  postage  $25.00;  letter  postage  $5.00. 
Dr.  Parcels  Postage  for  first  item;  Expense  for  the  second. 

14.  Received  a  bill  from  Remington  Typewriter  Co.,  for  4  type- 
writers and  desks,  $481.00.    Settled  the  same  in  cash. 

15.  Paid  James  A.  Stephens,  cash  in  full  of  Mr.  Fisher's  note  of 
$1000.00,  with  interest  at  6%  to  date.  This  note  was  assumed 
by  the  firm,  at  the  time  of  the  partnership  organization. 

C.  B.  and  B.  B. 

15.  Sold  D.  Alberson,  Dwight,  111.,  trade  50%,  6%  cash  15  days,  and 
forwarded  by  parcels  post,  1  Fob  No.  2201,  $7.75;  1  Fob  No. 
2210,  $8.00;  1  Locket  No.  2400,  $7.25;  i  doz.  Collar  Buttons  No. 
2501  @  $6.75  per  doz.-;  1  Ring  No.  2603,  $19.00;  1  Bar  Pin  No. 
2610,  $4.50.     Added  postage,  30  cents  to  the  bill. 

15.       Made  up  pay  roll.     All  employees  paid  in  cash,  $351. 

15.  Foot  and  rule  up  your  invoice  book.  Post  items  to  credit  of 
personal  accounts  in  general  ledger  and  footing  the  debit  of 
Merchandise  Purchase  Account. 

Close  sales  book  and  post  individual  items  to  debit  of  custo- 
mers in  sales  ledger.  Post  footing  to  debit  of  Sales  Ledger  Con- 
trolling Account  and  to  credit  of  Merchandise  Sales  Account, 
both  in  general  ledger.  Close  cash  book  and  bring  down  the 
balance.  Post  in  accordance  with  instructions  given  under 
illustrated  form.  Also  post  your  Journal. 
The  bill  books  will  not  be  posted  from,  as  they  are  auxiliary. 

Take  a  trial  balance  of  your  general  ledger  including  the  bal- 
ance from  the  cash  book  as  a  debit;  also  take  trial  balance  of 
the  sales  ledger,  the  trial  being  brought  to  balance  by  includ- 
ing the  Sales  Ledger  Controlling  Account  from  the  general 
ledger  as  a  credit.  Accounts  which  balance  should  be  closed 
and  not  shown  in  either  trial  balance. 


WHOLESALE  u^"""^/^^' '  T  yy  101 

191.. 

"  16.  Bought  of  Goldsmith  Stern  &  Co. ,  New  York,  N.  Y. ,  the  following 
bill  of  goods  subject  to  cash  discount  5 % :  3  doz.  Rings  No.  1004 
@  $15  per  doz.;  2  doz.  Rings  No.  1006  @  $18  per  doz.;  4  doz. 
Rings  No.  1007  @  $13  per  doz.;  2  doz.  Rings  No.  1105  @  $20 
per  doz.;  2  doz.  Scarf  Pins  No.  840  @  $10  per  doz.;  2  doz.  Scarf 
Pins  No.  843  @  $9  per  doz. ;  3  doz.  Scarf  Pins  No.  846  @  $12 
per  doz. ;  2  doz.  Scarf  Pins  No.  850  @  $15  per  doz. ;  1  doz.  Lock- 
ets No.  2005  @  $15  per  doz.;  2  doz.  Lockets  No.  2005  @  $18  per 
doz.;  1  doz.  Bracelets  No.  943  @  $25  per  doz.;  2  doz.  Bracelets 
No.  647  @  $18  per  doz. ;  1  doz.  Bracelets  No.  923  @  $30  per  doz. ; 
3 'doz.  Cuff  Buttons  No.  433  @  $36  per  doz.;  2  doz.  Cuff  Buttons 
No.  475  @  $40  per  doz.;  1  doz.  Cuff  Buttons  No.  473  @  $20  per 
doz.;  2  doz.  Set  Rings  No.  1003  @  $45  per  doz.;  2  doz.  Signet 
Rings  No.  1009  @  $25  per  doz.;  2  doz.  Signet  Rings  No.  1008 
@  $35  per  doz.  Paid  express  charges  on  above  $1.25.  Settled 
invoice  in  cash,  less  discount. 

Debit  Freight  and  Dray  age  for  the  express  as  this  is  not  to  be  charged  back 
to  the  shipper  in  this  transaction.  Also  make  entries  in  Invoice  Book  and 
another  entry  in  the  Cash  Boole  for  the  payment. 

16.  Report  received  from  salesmen  for  traveling  expenses.  Mr. 
Mitchell  $22.60;  Mr.  Winter  $17.38. 

Journal. 

17.  Bought  of  Martin-Copeland  Co.,  Providence,  R.  I.,  the  follow- 
ing bill  of  goods  subject  to  cash  discount  2%;  3  Chains  90  /  45 
@  $7  each;  3  Chains  90/47  @  $12  each;  4  Chains  90/49  @  $15 
each;  2  Chains  80/50  @  $25  each;  2  Chains  80/64  @  $40  each; 
3  Lorgnette  Chains  104/2  @  $10  each;  4  Lorgnette  Chains 
104/5  @  $15  each;  3  Waldemar  Chains  200/2  @  $8  each;  4 
Waldemar  Chains  200/4  @  $15  each;  3  Waldemar  Chains  200/9 
@  $20  each;  12  Neck  Chains  40/3  @  $6  each;  9  Neck  Chains 
40/35  @  $8  each;  6  Neck  Chains  40/37  @  $12  each.  Paid  ex- 
press charges  $1.75. 

Dr.  Freight  and  Drayage. 

17.  Settled  invoice  of  Martin-Copeland  Co.,  of  this  date  at  2%  dis- 
count and  included  in  our  remittance  $95.80  to  cover  old  balance. 

17.  We  are  in  receipt  of  an  order  from  Dupee  Bros.,  Concordia, 
Kans.,  for  1  Empire  Clock  No.  5030,  $75.00;  1  Bermuda  Clock 
No.  5035,  $45.00;  1  Boss  Case  No.  325,  $30.00;  1  Elgin  Move- 
ment No.  439,  $15.00;  1  Fob  No.  3025,  $4.75;  1  Brooch  No.  3105, 


102  THEORY   OF   BOOKKEEPING 

191.. 

Jan.  17.  $8.95;  1  Scarf  Pin  No.  4309,  $13.00,  all  subject  to  trade  discounts 
of  50  and  25%,  net  30  days.  At  the  purchaser's  request  we  are 
sending  the  clocks  by  freight  via  Santa  Fe  R.  R.  The  watches 
and  jewelry  we  have  shipped  via  Wells  Fargo  &  Co.  Express. 

18.  Received  cash  of  Larson  &  Son.,  Brookville,  Ind.,  in  full  of  in- 
voice sold  them  on  the  8th  inst.,  $**4t.*^  plus  $100  on  the  old 
account.     Total  $***  *^^. 

18.  Sold  Crandall  Lumber  &  Hardware  Co.,  LaGrange,  Ky.,  less 
trade  discounts  of  50  and  25%,  net  30  days,  1  Regulator  No. 
80,  $105.00,  and  1  Cuckoo  Clock  No.  20,  $33.45. 

"  19.  Shipped  Ballard  Bros.,  East  Alton,  111.,  C.  O.  D.  via  Adams 
Express,  2  doz.  Med.  Knives  No.  2210  @  $10.50  per  doz.;  2  doz. 
Med.  Forks  No.  2211  @  $10.50  per  doz.;  1  French  Briar  Pipe 
No.  8005,  $6.50;  1  Meerschaum  Pipe  No.  8010,  $15.00;  1  Mani- 
cure Set,  3  Piece,  No.  4002,  $3.00;  1  Hand  Bag  No.  4512,  $14.00. 
Trade  discount  70%;  cash  discount  6%.  The  purchasers  re- 
mitted $5.00  in  cash  with  their  order. 

Enter  this  sale  in  your  sales  book  for  the  full  amount  of  the  bill  after  de- 
duction of  the  trade  discount  but  post  to  the  C.  O.  D,  Account  and  not  to 
Ballard  Bros.  The  payment  and  the  cash  discount  on  the  whole  bill  will  be 
entered  in  the  cash  book  and  both  posted  to  the  credit  of  the  C.  O.  D.  Account. 

20.  Forwarded  a  check  of  $50.00  to  each  of  our  salesmen;  also  re- 
mitted New  York  Exchange  of  $750.00  to  Waltham  Watch  Co., 
Waltham,  Mass.,  on  account. 

20.  Received  an  order  for  goods  from  H.  H.  Buie,  Edelstein,  111. 
Goods  not  in  stock.  We  have  placed  the  order  with  James  E. 
Blake,  Providence,  R.  I.,  and  ordered  them  to  ship  via  the  C. 
B.  &  Q.  R.  R.,  directly  to  our  customer.     No  entry. 

21.  Received  from  Foley  &  Williams  Mfg.  Co.,  Cleveland,  Ohio, 
advice  of  shipment  of  sewing  machine  to  our  customer  W.  E. 
Dorman,  East  Dubuque,  Iowa.  The  manufacturers  have  billed 
to  us  at  $11.50  less  10%  trade,  and  2%  cash  20  days.  We  re- 
billed  to  customer  at  $56.50  less  70%  trade  and  6%  cash. 
Enter  in  invoice  and  sales  book  after  deduction  of  trade  discount. 

21.  Paid  J.  M.  W.  Jones  Stationery  &  Printing  Co.,  another  in- 
stallment on  our  catalogue  contract,  $250.00;  (Dr.  Catalogue) 
also  paid  for  stationery  $17.80. 

Dr.  Expense. 

22.  Bought  of  S.  O.  Bigney  &  Co.,  Attleboro,  Mass.,  the  following 


WHOLESALE  103 

191.. 

Jan.  22.  bill  of  goods  subject  to  trade  discount  20%  and  cash  2%:  2  doz. 
Chains  No.  3001  @  $12  per  doz.;  3  doz.  Chains  No.  3002  @  $18 
per  doz.;  4  doz.  Chains  No.  3003  @  $16  per  doz.;  2  doz.  Chains 
No.  3009  @  $20  per  doz.;  2  doz.  Chains  No.  3010  @  $25  per 
doz.;  1  doz.  Chains  No.  3018  @  $30  per  doz.;  2  doz.  Chains  No. 
3022  @  $24  per  doz.;  3  doz.  Chains  No.  3029  @  $26  per  doz. 
Paid  express  charges  on  above  $1.75  and  charged  same  back 
to  the  shipper;  settled  invoice  in  cash  less  discount  and  ex- 
press charges. 

22.  Paid  Commonwealth  Edison  Co.,  Hght  bill,  $4.50;  Marshall- 
Jackson  Co.,  for  office  supplies,  $9.80;  Burroughs  Adding  Ma- 
chine Co.,  for  No.  9  Adding  Machine,  $415. 

Distinguish  between  items  of  Expense  and  Furniture  and  Fixtures. 

"  22.       Settled  pay  roll  in  cash,  $351.00. 

23.  Koch  Cut  Glass  Co.,  City,  advises  that  they  have  shipped  via 
C.  B.  &  Q.  R.  R.  direct  to  our  customer,  Farmersville  Hard- 
ware Co.,  East  Moline,  111.,  the  goods  ordered  by  us  on  the 
12th  inst.,  and  are  billing  the  same  to  us  less  5%  for  cash,  as 
follows:  1  No.  43  Pitcher,  $15;  1  doz.  Tumblers  to  match.  No. 
28,  $26.50;  1  Sandwich  Plate  No.  96,  $4.50;  1  Cheese  Plate  and 
Cover  No.  35,  $8;  1  Candle  Stick  No.  43,  $3.50.  We  have  re- 
billed  to  the  customer,  less  50%  trade  discount,  cash  discount 
6%  10  days,  as  follows:  1  Pitcher  No.  375,  $42.00;  1  doz.  Tum- 
blers No.  376,  $75.35;  1  Sandwich  Plate  No.  380,  $12.35;  1 
Cheese  Plate  and  Cover  No.  383,  $23.45;  1  Candle  Stick  No. 
392,  $10.50. 

23.  Received  cash  of  Henry  Dorman  in  full  of  our  invoice  of  the 
21st,  less  6%  cash  discount,  $^^^4^.4^^;  also,  of  Larson  &  Co,,  the 
balance  due  on  their  account,  $**4fr.*4fr. 

23.  Salesmen  report  expenses:  Mr.  Winter  $23.65;  Mr.  Mitchell 
$22.60. 

'  23.  Bought  of  S.  &  B.  Lederer  Co.,  Providence,  R.  I.,  the  follow- 
ing bill  of  goods  subject  to  trade  discount  40%  and  cash  5%  15 
days:  2  doz.  Chains  No.  345  @  $15  per  doz.;  2  doz.  Chains  No. 
348  @  $13.50  per  doz. ;  2  doz.  Chains  No.  349  @  $12.75  per  doz. ; 
2i  doz.  Chains  No.  350  @  $10  per  doz. ;  3  doz.  Collar  Buttons 
No,  425  @  $1.50  per  doz. ;  4  doz.  Collar  Buttons  No.  428  @  $2.75 
per  doz.;  5  doz.  Collar  Buttons  No.  438  @  $2.00  per  doz.;  2  doz. 


104  THEORY   OF  BOOKKEEPING 

191.. 

Jan.  23.       Neck  Chains  No.  523  @  $18  per  doz.;  3  doz.  Neck  Chains  No. 
535  @  $16  per  doz.;  2  doz.  Neck  Chains  No.  539  @  $16.95  per 
doz.;  3  doz.  Neck  Chains  No.  545  @  $20.75  per  doz. 
Paid  express  charges  on  above  $1.25  and  charged  same  back 
to  the  shipper. 

24.  Seymour  Bros.,  Hamburg,  la.,  have  dissolved  partnership  and 
we  have  accepted  the  note  of  Henry  Seymour,  senior  member 
of  the  firm,  dated  today,  drawn  for  the  balance  of  their  account 
plus  sale  of  the  13th  inst.,  due  in  10  days  with  6%  interest, 
payable  at  our  place  of  business,  in  full. 

Dr.  Bills  ReceivaJAe  and  credit  Sales  Ledger  Controlling  Account  in  Journal. 
Also  post  lo  credit  of  customer. 

24.  Discounted  note  of  Craig  &  Co.,  at  the  bank.      Face  of  Note 

$500;  interest  90  days   6%,  $^^4^4^.4^*;  discount  days,  7%, 

$4^.3^.3^. .5^.3^;  proceeds  placed  to  our  credit,  $*4j4t.4f.5t  (C.  B.  and  B. 
B.);  the  bank  has  also  placed  to  our  credit  the  proceeds  of  a 
sight  draft  which  we  drew  on  Marseilles  Co.,  Farmerville,  La., 
for  collection.  Face  of  draft  $144.40.  Collection  fees,  $.85. 
C,  B.,  full  amount  on  delut  side,  and  Collection  and  Exchange  on  credit  side. 

25.  Sold  Boe  Bros.,  Findlay,  O.,  less  50%  trade  discount,  cash  6%, 
1  Bracelet  No.  4010,  $25;  1  Bracelet  No.  4020,  $18;  1  Signet 
Ring,  size  8,  No.  4100,  $6.50.  The  purchasers  have  ordered 
the  goods  sent  by  Parcels  Post,  and  enclosed  us  their  check 
for  the  amount  of  the  bill,  less  trade  and  cash  discounts,  plus 
35  cents  for  parcels  postage. 

This  transaction  may  be  entered  directly  in  the  cash  book,  and  from  there 
posted  to  the  Merchandise  Sales  Account,  but  the  better  practice  is  to  open 
an  account  with  the  customer,  charging  him  for  the  sale  from  the  sales  book 
and  crediting  him  for  the  payment  from  the  cash  book.     This  you  will  do. 

25.  Bought  of  WalthamWatch  Co. ,  Waltham,  Mass. ,  and  received  by 
city  delivery  the  following  bill  of  goods  subject  to  trade  dis- 
count 10%  and  2%  for  cash  30  days:  20  Movements  No.  73  @ 
$4  each:  15  Movements  No.  360  @  $6  each;  15  Movements  No. 
361  @  $7.50  each;  15  Movements  No.  375  @  $8.25  each;  10 
Movements  No.  392  @  $10.50  each;  8  Movements  No.  430  @ 
$15  each;  10  Movements  No.  295  @  $18  each;  15  Movements  No. 
277  @  $20  each;  15  Movements  No.  245  @  $22.25  each;  10  Move- 
ments No.  200  @  $25  each;  5  Movements  No.  204  @  $30  each; 
3  Movements  No.  202  @  $45  each. 

26.  Received  an  order  for  goods  from  Boe  Bros.,  Findlay,  Ohio. 


WHOLESALE  105 

191.. 

Jan.  26.  Goods  not  in  stock.  We  have  placed  the  order  with  Koch  Cut 
Glass  Co. ,  City,  and  ordered  them  to  ship  via  the  C.  B.  &  Q. 
R.  R.,  directly  to  our  customer.     No  entry. 

26.  Received  of  Adams  Express  Company,  balance  due  us  on  C.  O. 
D.  shipment  made  to  Ballard  Bros.,  on  the  19th  inst.,  $**4t.**. 

"  27.  Sold  Birch  Hardware  Co.,  Earlville,  111.,  70%,  net  4  months:  6 
Fountain  Pens  No.  732,  @  $1.00;  2  Traveling  Sets  No.  235,  8 
pieces,  @  $17.00;  1  Traveling  Set  No.  243,  15  pieces,  $32.00;  3 
Jewel  boxes  No.  325,  @  $4.75;  2  Glove  boxes  No.  342,  @  $14.00;  2 
Clothes  brushes  No.  275,@$5.00;  2  Military  Sets,  No.  299,  $12.35. 

27.  Sold  Salmon  &  Wilson,  Newport,  N.  H.,  subject  to  trade  dis- 
count of  70%  and  cash  discount  6%  30  days:  1  doz.  Chains, 
Asst.,  No.  7500,  $20.50;  1  Coat  Chain  No.  7510,  $3.00;  2  Fobs 
No.  7512,®  $6.75;  i  doz.  Silk  Guard  Chains  No.  7514,  $.85  each; 
2  Hair  Chain  Mtgs.  No.  7620,  @  $4.50;  2  Lockets  No.  7640,  @ 
$6.00;  2  Sohd  Crosses,  No.  7680,  @  $19.75;  1  Emblem  Button 
No.  7700,  $7.50;  1  Initial  Ring  No.  7765,  $12.00;  3  Thimbles, 
Asst.  sizes,  No,  8023,  $3.75  each;  1  Bracelet  No.  4023,  $13.50; 
1  Tie  Clasp  No.  4053,  $28.50;  1  Scarf  Pin  No.  4070,  $2.00;  1 
Waist  Pin  Set  No.  4100,  $2.75;  1  Pr.  Cuif  Buttons  No.  4200,  $1.75. 

28.  James  E.  Blake  &  Co.,  Providence,  R.  I.,  manufacturers,  ad- 
vise that  they  have  made  shipment  of  our  order  of  the  20th 
inst.,  to  H.  H.  Buie,  Edelstein,  111.,  via  C.  B.  &  Q.  R.  R.,  and 
have  billed  us  the  goods  as  follows:  1  Tea  Set  No.  W105,  6 
pieces  complete,  $35;  1  Percolator  No.  W210,  4  pints,  $8.50;  1 
Coffee  Set  No.W316,  4  pieces,  $19.50;  less  discount  of  5%.  We 
have  rebilled  to  our  customer  as  follows:  1  Tea  Set  No.  25,  6 
pieces  complete,  $85;  1  Percolator  No.  28,  4  pints,  $19.50;  1 
Coffee  Set  No.  545C,  $45.75;  less  50%,  net  10  days. 
Discounted  invoice  of  James  E.  Blake  &  Co.,  in  cash. 

"  29.  Bought  of  Waltham  Watch  Co.,  Waltham,  Mass.,  and  received 
by  city  delivery  the  following  bill  of  goods  subject  to  trade 
discount  10%,  and  2%  for  cash  30  days:  10  Waltham  Movements 
No.  25  @  $4.75  each;  15  Waltham  Movements  No.  28  @  $5.25 
each;  10  Waltham  Movements  No.  34  @  $8  each;  15  Waltham 
Movements  No.  39  @  $9.75  each;  10  Waltham  Movements  No. 
40  @  $10.25  each;  8  Waltham  Movements  No.  42  @  $12.75  each; 
6  Waltham  Movements  No.  43  @  $18  each;  5  Waltham  Move- 
ments No.  44  @  $22  each;  10  Waltham  Movements  No.  46  @ 


106  THEORY  OF  BOOKKEEPING 

191.. 

Jan.  29.  $28  each;  8  Waltham  Movements  No,  50  @  $30  each;  10  Wal- 
tham  Movements  No.  51  @  $35  each;  4  Waltham  Movements 
No.  55  @  $48  each. 

29.  Made  up  pay  roll  and  settled  in  cash,  $351.00.  Sent  each  sales 
man  a  check  of  $100  for  his  monthly  salary. 

30.  Received  of  D.  Alberson,  Dwight,  111.,  cash  in  full  of  invoice 
sold  him  on  the  15th  inst.,  less  6%  cash  15  days. 

This  bill  included  a  charge  for  parcels  postage.  Discount  is  computed  on 
bill  before  postag-e  is  added. 

30.  One  of  the  customers  of  the  old  firm,  J.  G.  Bromberg,  Schuy- 
ler, Neb.,  has  filed  a,  voluntary  petition  in  bankruptcy  and  the 
trustee  has  sent  us  dividend  check  for  25%  of  the  account. 
The  balance  is  lost. 

C.  B.,  also  make  a  Journal  entry  debiting  Loss  and  Gain  and  crediting  Sales 
Ledger  Controlling  Account.  Post  credit  to  account  in  General  Ledger  as 
well  as  to  customer's  account  in  Sales  Ledger. 

30.  Received  an  order  for  goods  from  Boe  Bros.,  Findlay,  Ohio. 
Goods  not  in  stock.  We  have  placed  the  order  with  Koch  Cut 
Glass  Co.,  City,  and  ordered  them  to  ship  via  the  American 
Express  Co.,  directly  to  our  customer.     No  entry. 

30.  Report  received  from  salesmen,  Mr. Winters,  $18.60;  Mr.  Mit- 
chell, $24.50. 

31.  Close  your  Invoice  Book,  Sales  Book,  and  Cash  Book,  and  post 
these,  and  your  Journal. 

Take  trial  balances  of  your  Sales  Ledger  and  General  Ledger, 
and  submit  all  your  books  to  your  teacher  for  approval;  also 
see  that  unpaid  notes  on  hand,  or  outstanding,  per  bill  books, 
equal  balance  of  corresponding  ledger  account. 


WHOLESALE  107 

INSTRUCTIONS  FOR  CLOSING  LEDGER 

(a)  Sales  Ledger:    Close  all  accounts  in   this  ledger  which  balance. 

(b)  General  Ledger  will  be  closed  as  follows: 

1.  Bills  Receivable,  Sales  Ledger  Controlling  Account,  the  Sales- 
men and  accounts  of  creditors  and  any  other  financial  accounts,  with  a 
balance. 

2.  Close  Goods  in  Stock  into  Trading  account;  Freight  and  Dray- 
age,  and  Discounts  on  Purchases  into  Merchandise  Purchase;  Merchan- 
dise Purchase  into  Trading  Account;  Parcels  Postage  (taking  into  ac- 
count inventory  of  $23.50  for  stamps  on  hand),  and  Discounts  on  Sales, 
into  Merchandise  Sales;  and  the  latter  into  the  Trading  Account;  close 
Trading  Account  into  Loss  and  Gain  after  entering  an  Inventory  of 
Goods  in  Stock  on  January  31st,  $18232.70.  Bring  the  inventory  down 
again  into  the  Goods  in  Stock  Account. 

3.  Close  Furniture  and  Fixtures  into  Loss  and  Gain  for  a  deprecia- 
tion of  1%  on  cost,  treating  the  difference  as  an  inventory. 

4.  Close  Expense  into  Loss  and  Gain  taking  into  account  the  fol- 
lowing inventories: 

Annual  Membership  in  R.  G.  Dunn  &  Co....  $100.00 

"    BradstreetCo 100.00 

"   Jeweler's  B.  of  T...       75.00 

$275.00 
One  month  expired(l/ 12) $  $ 

Postage  on  hand $    2.50 

Total $ 

5.  Close  Interest  and  Discount,  Collection  and  Exchange  and  Tra- 
veling Expense,  into  Loss  and  Gain.     (No  Invjentories.) 

6.  Catalogue  Account  will  be  closed  with  a  balance  as  the  cata- 
logues are  worth  to  us  only  what  we  have  so  far  invested  in  the  print- 
ing, hence  no  profit  or  loss. 

7.  Close  Loss  and  Gain  into  partners'  accounts  observing  the  divis- 
ion of  profits  agreed  upon,  and  close  partners'  accounts  with  a  balance. 

8.  Prepare  Financial  Statement  as  per  form  on  page  59.  Submit 
all  your  books  for  approval  again. 


108  THEORY   OF   BOOKKEEPING 

191.. 

Feb.  1.  It  has  been  decided  to  incorporate  the  enterprise  for  $50,000.00. 
Our  attorney  has  prepared  and  forwarded  the  necessary  apph- 
cation  for  a  charter  and  we  have  advanced  him  cash  for  fees 
to  be  paid  to  the  Secretary  of  State  to  whom  the  apphcation 
was  made,  $45,  and  $50  attorney's  fees.  (Debit  Organization 
Expense.) 

If  this  sum  were  charged  into  the  Expense  Account,  the  next  month's  busi- 
ness would  be  burdened  with  the  entire  cost  of  organization.  This  expense 
should  be  distributed  over  a  longer  period  by  gradually  writing  off  Organiza- 
tion Expense  Account  into  Loss  and  Gain. 

1.  The  capital  stock  of  the  company  has  been  subscribed  as  fol- 
follows:  Edwin  B.  North,  160  shares;  Walter  C.  Fisher,  160 
shares;  Henry  Lorber,  our  credit  man,  50  shares;  Edwin  H. 
Johnson,  Mgr.  of  Watch  Dept.,  50  shares;  J.  P.  Shaw,  45 
shares;  C.  W.  Eeynolds,  35  shares. 

The  partners  in  full  of  their  stock  turn  over  all  the  partner- 
ship assets  to  the  corporation,  the  corporation  assuming  the 
liabiUties.  It  is  considered  that  the  difference  betw^een  the 
partnership's  net  capital  and  the  $32,000.00  worth  of  stock 
taken  by  the  partners,  is  made  up  by  the  Good  Will  thus  far 
established  by  the  business  and  their  partnership  interests  are 
therefore  accepted  in  full  of  their  stock. 

We  will  continue  using  the  old  books.  Make  Journal  entry 
debiting  each  partner  for  his  present  worth  or  net  capital. 
Good  Will  for  the  difference  between  the  stock  taken  by  them 
and  their  combined  net  capitals,  and  crediting  capital  stock 
for  the  par  value  of  the  stock  issued  to  them.  Make  cash  book 
entries  for  the  payments  by  the  other  subscribers. 
Credit  Capital  Slock. 

"     2.       Paid  J.  M.  W.  Jones  Printing  &  Stationery  Co.,  cash  $5,000.00 
on  account  of  first  installment  of   com]3leted  catalogues  de- 
livered us  today. 
Dr.  Catalogue. 

Also  paid  U.  S.  Express  Co.,  $55.00  for  express  charges  on 
catalogues  forwarded  to  customers  and  prospects. 
Dr.  Expeiise. 

Also  mailed  our  Mr.  Mitchell  check  for  $45  to  cover  traveling 
expenses. 

2.  Sold  Dupee  Bros.,  Concordia,  Kan.,  one  Cut  Glass  Vase  No.  40, 


WHOLESALE  109 

191.. 

Feb.  2.       18  inches,  $82;  less  70%  trade  discount  and  6%  for  cash  in  10 
days. 

2.  Sold  Boe  Bros.,  Findlay,  O.,  subject  to  trade  discount  of  50%, 
and  cash  discount  of  6%  10  days:  1  Handbag  No.  8042,  $23;  1 
Pocket  Manicure  Set  No.  25,  $4.50;  1  Fountain  Pen  No.  435, 
$6.70;  1  Umbrella  No.  4032,  $12.45;  1  Military  Brush  Set  No. 
4502,  $7.25;  1  Traveling  Set  No.  4720,  13  pieces,  $3.  The  cus- 
tomer enclosed  check  in  full. 

3.  Paid  cash  to  Recorder  of  Deeds  for  recording  our  charter 
$11.25  (Dr.  Organization  Expense);  also  advanced  our  attorney 
$10.00  on  account  of  fees  and  court  costs  to  bring  suit  against 
John  Sedgwick,  whose  account  is  long  past  due. 

Dr.  General  Expense. 

3.  Received  of  Crandall  Lumber  &  Hardware  Co.,  on  account,  $50; 
also  Farmersville  Hardware  Co.  for  their  invoice  of  the  23rd 
ult.,  less  6%  10  days,  $***.**• 

4.  Received  an  order  from  Salmon  &  Wilson,  Newport,  N,  H.,  for 
sewing  machine  which  we  do  not  carry  in  stock.  We  have 
placed  the  order  with  Foley  &  Williams  Mfg.  Co.,  Cleveland, 
O.,  and  ordered  them  to  ship  via  the  N.  W.  R.  R.,  directly  to 
our  customer, 

"  5.  Bought  of  International  Silver  Co.,  Meridian,  Conn.,  less  trade 
25%  and  cash  5%  30  days:  12  doz.  Med.  Knives  @  $2  per  doz.; 
12  doz.  Med.  Forks  @  $2  per  doz.;  12  doz.  Med.  Knives  @  $3 
per  doz.;  12  doz.  Med.  Forks  @  $3  per  doz.;  12  doz.  Tea  Spoons 
@  $2.25  per  doz.;  10  doz.  Tea  Spoons  @  $2.75  per  doz.;  12  doz. 
Dessert  Spoons  @  $3.25  per  doz.;  12  doz.  Table  Spoons  @  $4 
per  doz. ;  5  doz.  Berry  Spoons  @  $1.25  each;  6  doz.  Berry  Spoons 
@  $1.50  each;  2  doz.  Soup  Ladles  @  $1.85  each;  2  doz.  Gravy 
Ladles  @  $1  each;  3  doz.  Cream  Ladles  @  $.65  each;  3  doz. 
Baby  Spoons  @  $.25  each;  3  doz.  Bon  Bon  Tongs  @  $.35  each; 
2  doz.  Sugar  Sifters  @  $.50  each. 

Advanced  in  cash  to  our  drayman  $35.00  for  freight  which  you 
will  charge  back  to  the  shipper. 

Where  the  freight  charges  are  large  it  is  customary  to  advance  the  same  to 
the  drayman.  ^Vhere  they  are  small  the  drayman  pays  the  freight  and  charges 
the  same  up  on  the  monthly  statement  to  us. 

"     5.       Settled  bill  of  Hastings  Express  Co. ,  for  dray  age  to  date,  $3.25. 


110  THEORY   OF  BOOKKEEPING 

191.. 

Feb.  6.  Shipped  Perry  &  Kiggins,  Philadelphia,  Miss.,  C.  O.  D.  via 
Southern  Express:  1  pr.  Cuff  Buttons  No.  1022,  $13.75;  1  Scarf 
Pin  No.  1042,  $6.50;  1  doz.  Collar  Buttons  No.  1084,  $3.50;  1 
Bar  Pin  No.  1130,  $9.00;  1  Brooch  No.  1132,  $7.50;  1  Lorgnette 
Chain,  14K  No.  1152,  $22.00;  1  Lorgnette  Chain,  lOK  No.  1156, 
$15;  1  Festoon  Neck  Chain  No.  1230,  $14.  This  bill  is  subject 
to  trade  discount  of  70%  and  cash  discount  of  6%.  The  pur- 
chaser has  enclosed  $2.00  in  cash  with  his  order,  the  express 
company  to  collect  the  balance  on  delivery. 
Use  C.  O.  D.  Account. 

"  6.  Sold  Dupee  Bros.,  Concordia,  Kas.,  70%  off,  6%  cash:  1  Chain 
No.  842,  $5.50;  1  Chain  No.  843,  $3.75;  1  Locket  No.  932,  $9.40; 
1  Locket  No,  938,  $7.50;  1  Scarf  Pin  No.  1004,  $10.25;  1  Waist 
Set  No.  1025,  $4.25;  1  Waist  Set  No.  1028,  $3.75;  1  Fob  No.  325, 
$8.00;  1  Cross  No.  1084,  $9.50;  1  Emblem  Charm  No.  1090,  $35; 
1  doz.  Collar  Buttons  No.  1105,  $4.50;  1  Signet  Ring  No.  1203, 
$18.75;  1  Initial  Ring  No.  1280,  $12.50;  1  Bracelet  No.  1293, 
$13.50;  1  Brooch  No.  1302,  $15.75.     Cash  enclosed  with  order. 

"  7.  Paid  cash  for  pay  roll,  $351.00;  S.  O.  Bigney  &  Co.,  in  full  of  ac- 
count per  ledger,  $4t*^.4fr4fr;  S.  &B.  LedererCo.,  in  full  of  account, 
less  5%  for  cash  on  purchase  of  the  23rd  ult.,  $4^**.**;  Koch  Cut 
Glass  Co.,  in  full  of  purchase  of  23rd  ult.,  $*4t4t.*^. 
We  did  nol  pay  last  bill  on  time  lo  get  benefit  of  discount.  Consult  your 
ledger  in  settling  an  account. 

8.  Received  cash  of  Henry  Seymour  in  full  of  his  note  of  the  24th 
ultimo,  plus  interest  10  days,  6%. 

9.  Reports  from  Salesmen  for  traveling  expenses:  Mr.  Winter, 
$21.25;  Mr.  Mitchell,  $19.80.     Sent  Mr.  Winter  check  for  $25. 

9.  Advice  of  shipment  to  our  customer,  Boe  Bros.,  Findlay,  Ohio, 
received  from  Koch  Cut  Glass  Co.,  per  our  order  of  the  26th 
inst.     The  manufacturer  bills  to  us,  and  we  rebill  as  follows: 

Our  Cat.  No.  Mfg.  No.                  Articles.             Bill  to  us.  Bill  by  us. 

865  B.           345  1  Punch  Bowl $19.00  $57.35 

773  C.           230  1  Bread  Tray 4.75  15.00 

537  D.           873  1  Spoon  Tray 2.75  8.75 

235  C.           429  1  Bake  Dish 5.50  16.00 

Discounts  to  us  50%  off;  5%  for  cash.      Discounts  to  our  custo- 
mer, 70%  off,  2%  cash  10  days. 
We  settle  our  invoice  in  cash,  less  discount. 


WHOLESALE  HI 

191.. 

Feb.  10.       We  have  taken  out  fire  insurance  on  our  fixtures  and  goods  in 
stock.     Paid  premium  in  cash,  $114.50.     (Dr.  Insurance.) 

"  11.  Bought  of  D.  F.  Briggs  &  Co.,  Attleboro,  Mass.,  15%  off,  cash 
15  days  3%,  and  received  by  city  deh very:  6  Clocks, Weston 
No.  75,  @  $19;  6  Clocks,  Fayette  No.  48,  @  $11;  6  Clocks, 
Bastrop  No.  35,  @  $10.50;  3  Clocks,  Theron,  @  $13.05;  3  Clocks, 
Tycoon,  @  $13.05;  3  Clocks,  Thrace,  @  $19;  3  Cuckoo  Clocks 
No.  25,  @  $9.60;  6  Cuckoo  Clocks  No.  242,  @  $19.00;  3  Regula- 
tors No.  109,  @  $24;  12  Alarm  Clocks  No.  82,  lot  $14.75. 

"  11.  Returns  received  in  cash  from  Southern  Express  Company  for 
balance  of  C.  O.  D.  shipment  made  to  Perry  &  Kiggins  on  the 
6th  inst. 

"  12.  Sold  D.  Alberson,  Dwight.  111.,  50%  and  25%,  and  forwarded 
by  Parcels  Post:  1  Chain  No.  8002,  $8;  1  Fob  No.  8030,  $3.25; 
1  Outing  Chain  No.  8032,  $1.90;  1  Lorgnette  No.  9020,  $8.50. 
They  remitted  their  check  with  the  order  to  cover  the  bill  and 
$.20  parcels  postage. 

"  13.  Sold  Crandall  Lumber  &  Hardware  Co.,  La  Grange,  Ky.,  70% 
off,  6%  10  days:  1  Travehng  Set  No.  365,  $25;  1  Military  Brush 
Set  No.  367,  $6.50;  1  Smoking  Set  No.  925,  $4;  2  Candle  Sticks 
No.  926,  $8;  1  Shaving  Set  No.  940,  $9;  also  2  Watches  at  $9.35 
each,  net  cash. 

"  13.  Received  cash  in  full  of  bill  sold  to  Dupee  Bros,  on  2nd  inst. 
less  discount.     Also  cash  from  H.  H.  Buie  in  full  of  account. 

"  13.  We  have  returned  one  of  the  typewriters  bought  last  month, 
and  received  a  refund  of  cash  $100. 

"  14.  Made  another  cash  payment  of  $5000.00  on  account  of  cata- 
logue deliveries;  also  disbursed  cash  for  pay  roll  $**.*^f ;  and  to 
Foley  &  Williams  Mfg.  Co.,  in  full  of  invoice  of  21st  ult. ,  less  2%. 

"  14.  Report  of  traveling  expenses:  Mr.  Winter,  $30.55;  Mr.  Mit- 
chell, $18.25. 

"  15.  Our  attorney  has  succeeded  in  effecting  a  settlement  with  John 
Sedgwick,  a  delinquent  customer  of  ours,  for  $250.00,  and  has 
remitted  us  cash  for  that  amount.  The  difference  is  a  loss. 
C.  B.  and  J. 

**  15.       Close  your  books  and  take  a  trial  balance  of  both  ledgers. 
"  16.       Bought  of  D.  F.  Briggs  &  Co.,  Attleboro,  Mass.,  trade  25%, 


112  THEORY  OF  BOOKKEEPING 

191.. 

Feb.l6.  cash  4%  10  days:  6  Opera  Glasses  No.  255,  @  $4;  6  Opera 
Glasses  No.  256,  @  $5;  6  Opera  Glasses  No.  257,  @  $6.75;  6 
Opera  Glasses  No.  259  @  $7;  4  Opera  Glasses  No.  263,  @  $10; 
3  Opera  Glasses  No.  269,  @  $15;  2  Opera  Glasses  No.  275,  @ 
$16.50;  1  Opera  Glass  No.  284,  @  $20;  3  Opera  Glasses  No.  289, 
@  $8.25;  3  Opera  Glasses  No.  293,  @  $9;  3  Opera  Glasses  No. 
294,  @  $10.25. 
Paid  Express  charges,  $2.25. 

17.       Received  cash  in  full  of  Boe  Bros,  account  less  discount  on 

last  sale. 
17.       Received  an  order  for  goods  from  Birch  Hardware  Co.,  Dwight, 

111.     Goods  not  in  stock.     We  have  placed  the  order  with  Wal- 

tham  Watch  Co.,  Waltham,  Mass.,  and  ordered  them  to  ship 

directly  to  our  customer.     No  entry. 

"  18.  Bought  of  Goldsmith,  Stern  &  Co.,  New  York,  N.Y.,  less  trade 
10%  and  cash  2%,  and  received  by  the  city  delivery:  6  Berry 
Dishes  No.  W220,  @  $3.50  each;  9  Berry  Dishes  No.  W206,  @ 
$2  each;  6  Cake  Baskets  No.  W204,  @  $3.25  each;  9  Cake  Bas- 
kets No.  W201,  @  $4  each;  5  Bread  Trays  No.  W230,  @  $4.75 
each;  3  Bread  Trays  No.  W603,  @  $2.75  each;  1  Punch  Bowl 
No.  W345,  @  $19;  3  Salad  Bowls  No.  W24,  @  $2.75  each;  6 
Fruit  Bowls  No.  W15,  @  $3.75  each;  5  Spoon  Trays  No.  W873, 
@  $2.75  each;  2  Gravy  Boats  and  Trays  No.W26,  @  $3.50  each; 
6  Whipped  Cream  Sets  No.W17,  @  $2.75  each;  6  Soup  Tureens 
No.  W606,  @  $4  each;  4  Bake  Dishes  No.  W429,  @  $5.50  each; 
3  Bake  Dishes  No.  W610,  @  $2.75  each;  6  Sandwich  Trays  No. 
W205,  @  $1.75  each;  6  Cracker  and  Cheese  Trays  No,  W207, 
@  $2  each;  6  Crum  Sets  No.  W190,  @  $4  each;  6  Crum  Sets 
No.  W191,  @  $3.50  each;  6  Cracker  Jars  No.  W94,  @  $1  each; 
6  Cracker  Jars  No.W93,  $1.25  each;  6  Tooth  Pick  Holders  No. 
W340,  @  $.50  each;  6  Tooth  Pick  Holders  No.  342,  @  $.35 
each;  3  Tea  Sets  No.  W105,  @  $35  each;  6  Percolators  No. 
W210,  @  $8.50  each;  4  Coffee  Sets  No.  W316,  @  $19.50  each. 
1  otal,  Jjh^^t^.**. 
Discounted  the  bill  in  cash. 

"  18.  Sold  Marseilles  Co.,  Farmersville,  La.,  subject  to  trade  dis- 
count 50%,  and  cash  discount  of  6%,  60  days:  1  Percolator  No. 
583,  4  pints,  $18;  1  Crum  Set  No.  595,  $6.50;  1  Cake  Basket  No. 
603,  $13.35;  1  Bread  Tray  No.  615,  $9;  1  Gold  Chain  No.  2309, 


WHOLESALE  113 

191.. 

Feb.  18.       lOK,  $30;  1  Lorgnette  Chain  No.  2325,  14K,  $22.50;  1  Scarf  Pin 
No.  2420,  §9. 

"  19.  Sold  Salmon  &  Wilson,  Newport,  N.  H.,  50  and  25%  off,  net  30 
days:  1  Thimble  No.  332,  lOK,  $8;  1  Hat  Pin  No.  338,  $2.50;  1 
Sash  Pin  No.  342,  $5;  1  Tie  Clasp  No.  351,  $3.50;  1  Pair  Sus- 
penders No.  1010,  $5.50;  1  Pair  Garters  No.  1015,  $4;  1  Leath- 
er Hand  Bag  No.  1103,  $26;  1  Bill  Book  No.  1201,  $2.75;  1  Pock- 
et Comb  and  Nail  File  No.  1230,  $2.25;  1  Collar  Bag  No.  1272, 
$2.95;  1  Fountain  Pen  No.  3575,  $4.25. 

20.       Made  final  payments  on  our  catalogue,  as  follows: 

Cash $9450.00 

Our  note,6%  30  days  payable  1st  Nat '1.  Bk.     5000.00 

20.  Paid  out  cash  for  express  charges  on  catalogues  sent  out, 
$95.80;  WalthamWatch  Co.,  on  account,  $372.60;  for  additional 
insurance,  $35.50. 

21.  Paid  out  cash  for  pay  roll,  $*4fr*.^*;  also  sent  Mr.  Mitchell  a 
check  for  $75.00,  and  Mr.  Winter  one  for  $50.00,  on  account  of 
traveling  expenses. 

2^  Received  cash  of  Crandall  Lumber  &  Hardware  Co.  for  the 
watches  covered  by  our  invoice  of  the  12th  instant  (terns  net) 
and  for  the  balance  of  the  invoice  less  6% ;  also  of  Dupee  Bros, 
in  full  of  account  $***.**. 

23,       Advice  of  shipment  received  from  WalthamWatch  Co. ,  of  goods 
ordered  by  Birch  Hardware  Co.  on  the  17th  instant. 
Our  No.    Their  No,  Article.  Billed  to  us.    Billad  by  us. 

25  75  1  Clock  (Weston)....        $19.00  $55.00 

340  48  1       "       (Fayette)...  11.00  33.50 

342  35  1      "       (Bastrop)...  10.50  32.00 

Discounts  to  us.  Trade  50%,  6%  30  days. 

Discounts  quoted  our  customers,  70%,  2%  10  days. 

"  25.  Sold  D.  Alberson,  Dwight,  111. ,  trade  50%  and  25%,  net  30  days: 
1  Cut  Glass  Punch  Bowl  No.  2525,  $85;  1  Cut  Glass  Bowl  No. 
2528,  $33.75;  1  Cut  Glass  Sugar  and  Cream  Set  No.  2552,  $25.65; 
1  Boss  Case  No.  2510,  14K  18  size  20  yr.,  $16.40;  1  Waltham 
Movement  No.  2618,  size  18,  19  jewel,  $65.  At  the  purchaser's 
request  we  have  shipped  the  cut  glass  by  freight  via  North 
Western  R.  R.,  and  the  watches  by  American  Express. 


114  THEORY  OP  BOOKKEEPING 

191.. 

Feb. 26.       Salmon  &  Wilson  have   discounted  their  invoice  of  the  27th 
ult.,  less  6%,  in  cash. 

"  26.  Sold  Marseilles  Co.,  Farmersville,  La.,  trade  discount  of  70%, 
cash  discount  6%,  30  days:  1  doz.  Knives  No.  820,  $45;  1  doz. 
Forks  No.  842,  $45;  1  Carving  Set  No.  25,  $43.35;  1  Crescent 
Case  No.  2309,  $32;  1  Elgin  Movement  No.  2510,  $65. 

"  27.  Waltham  Watch  Co.  has  drawn  on  us  at  sight  for  amount  of 
their  bill  of  the  25th  ult. ,  and  we  have  honored  the  drafts  in 
cash,  with  exchange  $.75. 

28.       Close  your  books,  post  and  take  trial  balance. 

28.       Close  Sales  Ledger,  Close  General  Ledger,  observing  the  fol- 
lowing instructions: 

CLOSING  INSTRUCTIONS 

1.  Close  Capital  Stock,  Bills  Receivable,  Catalogue,  Sales  Ledger 
Controlling  Account,  the  accounts  of  the  salesmen  and  all  personal  ac- 
counts payable,  with  a  balance. 

2.  Close  Goods  in  Stock  account  into  the  Trading  Account;  Parcels 
Postage  (Inventory  $11.00)  and  Discounts  on  Sales,  into  Merchandise  Sales; 
Discounts  on  Purchases  and  Freight  and  Dray  age  into  Merchandise 
Purchase;  Merchandise  Purchase  and  Merchandise  Sales  into  Trading 
Account.  Close  Trading  Account  (after  entering  Inventory  of  Goods  in 
Stock,  Feb.  28,  $21,555.00  on  the  credit  side)  into  Loss  and  Gain  and  carry 
inventory  over  into  Goods  in  Stock  Account. 

3.  Close  Furniture  and  Fixtures  (Inventory  $2500.00),  Expense  (un- 
expired memberships  $219.16;  postage  $120)  Collection  and  Exchange, 
Traveling  Expense  and  Insurance  (Inventory  for  unexpired  premiums, 
$137.50),  and  $2.60  of  Organization  Expense  (bring  down  the  balance), 
into  Loss  and  Gain. 

It  is  customary  to  distribute  Organization  Expense  over  a  period  of  about  five 
years  so  that  the  first  year's  business  will  bear  only  its  proportionate  share  thereof.  We 
write  off  1/60,  being  for  one  month,  or  $2.60. 

4.  Close  Loss  and  Gain  into  Undivided  Profits,  and  close  Undivided 
Profits  with  a  balance. 

5.  Prepare  a  Financial  Statement. 


WHOLESALE  115 

QUESTIONS  FOR  REVIEW 


1.  Define  a  shipping  clerk  and  explain  his  duties. 

2.  Why  is  it  important  for  him  to  be  acquainted  with  freight  classifications  and  rates? 

3.  What  are  the  three  principal  territorial  classifications  in  the  United  States? 

4.  How  should  orders  be  assembled  and  filled  where  the  stock  is  divided  into  different 

departments? 

5.  What  is  a  back  order? 

6.  What  should  be  done  in  the  shipping  department  before  sending  away  the  goods? 

7.  Define  routing  and  state  what  effect  it  may  have  on  the  customer. 

8.  What  is  a  bill  of  lading  and  what  are  the  two  forms? 

9.  .distinguish  between  a  "Straight"  bill  of  lading  and  an  "Order"  bill  of  lading. 

10.  Why  are  the  original  and  duplicate  of  the  "Order"  bill  of  lading  printed  in  different 

colors  ? 

11.  Define  the  invoice  book  and  explain  how  it  is  posted  from  when  purchase  ledger  is 

used.     When  the  accounts  of  the  creditors  are  kept  in  the  general  ledger. 

12.  Give  the  different  steps  in  filling  a  customer's  order. 

13.  Explain  the  operation  of  the  Duplicate  Billing  System. 

14.  Define  the  sales  book  and  explain  how  its  items  and  footings  are  posted  when  a  sales 

ledger  is  used. 

15.  Explain  the  purpose  and  use  of  a  sales  ledger  controlling  account. 

16.  Why  are  cash  discount  columns  provided  on  both  sides  of  the  cash  book  in  this  set? 

How  are  the  items  and  totals  of  these  columns  posted? 

17.  What  detailed  record  should  be  kept  of  our  written  obligations  and  of  other's  written 

obligations  to  us?    How  are  these  records  posted,  when? 

18.  What  is  a  private  ledger  and  why  is  it  kept? 

19.  In  case  goods  are  sold  C.  O.  D.  what  account  should  be  kept  in  the  ledger?    What 

should  the  position  of  the  debits  and  credits  be  therein? 

20.  Name  the  two  leading  mercantile  agencies  in  the  United  States. 

21.  What  is  I*arcels  Postage? 

22.  Explain  how  the  various  accounts  which  effect  the  gross  profits  are  related  to  one 

another  and  closed  in  this  set. 

23.  What  entry  should  be  made  when    we   advance  traveling  expenses  to  a  salesman? 

What  entry  when  he  reports  his  expenses  for  the  week  ? 

24.  In  changing  from  a  partnership  to  a  corporation  what  account  takes  the  place  of  the 

accounts  of  the  partners? 

25.  How  should  the  Loss  and  Gain  account  be  closed  in  a  partnership?   In  a  corporation? 


116 


THEORY   OF   BOOKKEEPING 


ABBREVIATIONS  IN  COMMON  USE 


@  or  a 

At 

Cwt.  or  cwt. 

Hundredweight 

A.  B.            .         . 

Bachelor  of  Arts 

B.B. 

Day  Book 

Acct. 

Account 

Bhk. 

Drawback 

Ad.       . 

.     Advertisement 

Dep.          .        . 

Deposit 

Agt.          .        . 

Agent 

Dept. 

Department 

Al.       . 

First  Class 

Dft.  or  dft. 

Defendant;  Draft 

Ami. 

Amount 

Buct. 

Discount 

Anst. 

Assistant 

Bu. 

Dividend 

Ave. 

Avenue 

Bo.  or  do.    . 

.     The  same 

Bal.      . 

Balance 

Bols.  or  dols.    . 

Dollars 

Bid.  Bhls. 

Barrel;  Barrels 

Doz.  or  doz. 

Dozen 

Bell.      . 

Bundle 

Br. 

Debtor;  Doctor 

B.  L. 

Bill  of  Lading 

Br'ge. 

Dray age 

B.  0. 

.    Buyer's  Option 

Ea.            .         . 

Each 

Bot. 

.     Bought 

E.  E.   . 

Errors  Excepted 

B.  Pay 

Bills  Payable 

E.  &  0.  E.  Errors  anc 

1  Omissions  Excepted 

B.  Bee. 

Bills  Receivable 

Etc.  or  etc.        .        , 

And  so  forth 

Brot. 

Brought 

Excli. 

.    Exchange 

Bro.  Bros. 

.  Brother;  Brothers 

Ex.  Cp.     . 

.     Without  Coupon 

B.  S.            .        . 

Bill  of  Sale 

Ex.  Biv.      . 

Without  Dividend 

Bu.  Bus. 

Bushel;  Bushels 

Exp. 

Expense 

Bx.  Bis. 

Box;  Boxes 

F.         .        .        . 

Fahrenheit;  French 

a 

100 

F.  or  Vol. 

.     Folio;  Page 

C.  B.           ,        . 

Cash  Book 

Fir.      . 

Firkin 

Cligd. 

Charged 

F.  O.B.           .        . 

Free  on  Board 

Ck.  Cks. 

Check;  Checks 

Ford. 

Forward 

a  0.  D. 

Collect  on  Delivery 

Gal.  or  gal. 

Gallon;  Gallons 

%       .      .      . 

Care  of 

Gr.       . 

Gross;  Grain 

Cat. 

Catalogue 

Ilf.  cli.  or  i  ch. 

Half  Chest 

C.  E. 

.     Civil  Engineer 

Ilhd. 

Hogshead 

C.  F.  I     .         Cos 

L,  Freight  and  Insurance 

lit.  or  Jit. 

.     Height 

CO.            .        . 

.    Consul  General 

LB.             .        . 

Invoice  Book 

C  U.        .        .     Q 

ourthouse;  Customhouse 

Ibid,  or  ibid.     . 

In  the  same  place 

Clk.      . 

Clerk 

In.  or  in. 

Inch; Inches 

CoU. 

Collection 

Inc. 

.  Incorporated 

Coml. 

Commercial 

Ins. 

Insurance 

Comm. 

.    Commission 

Inst. 

Instant;  this  month 

Const. 

Consignment 

Int.  or  int. 

Interest 

C  P.  A.  .         Cer 

Lified  Public  Accountant 

In  trans.  .         .  On  th 

B  passage  (in  transitu) 

Cr.                .  '      . 

Credit 

/.  0.  U. 

I  owe  you 

Cts.  or  cis. 

Cents 

Inn. 

Invoice 

Cur      . 

Currency 

J.F.             .        . 

Journal  Folio 

C.  W.  0. 

.     Cash  with  order 

Jour. 

Journal 

ABBREVIATIONS 


117 


Jr. 

L. 

L.  or  Ledg. 

L.  F. 

Lb.  or  lb.      . 

L.<&  G. 

Ltd.      . 

M. 

M.  or  m. 

Mach. 

Mdse. 

Mem. 

Wu- 

Mfrs. 

Misc. 

Mo.  or  mo.  mos. 

NaVl.  or  Natl. 

No.  Nos. 

02. 

P.  or  ]). 

Pay  nit.  or  paymt 

Pes. 

Pd.       . 

Per  an.  or  2)er  an.  By 

Per  cent,  or  per  cent. 


Junior 

Lady;  Lord 

Ledger 

Ledger  Folio 

Pound 

Loss  and  Gain 

Limited 

1000 

Month;  Mile 

Machinery 

Merchandise 

Memorandum 

.    Manufacturing 

Manufacturers 

Miscellaneous 

Month;  Months 

National 

.  Number;  Numbers 

Ounces 

Page;  Penny;  Pint 

Payment 

Pieces 

Paid 

the  year  (per  annum) 

r  By  the  hundred 

\      (per  centum) 


Pk.  or  pk. 

Pkcj.  or  pkg. 

Pres. 

Qt.  or  qt. 

Recpt. 

Reed. 

Retd. 

R.  R. 

Ry. 

S.  B. 

Sec. 

88.      . 

8q. 

8.  0.  or  8.  o. 

Sr. 

Sunds. 

Treas.      . 

Trans. 

Vice  Pres.  or  V.  P. 

W.B.  .        . 

Wt.  or  wt. 

Y.  or  yr. 

Yd.  or  yd. 


Preferred 

.    Peck 

Package 

President 

Quart 

Receipt 

Received 

Returned 

Railroad 

Railway 

Sales  Book 

Secretary 

Steamship 

.     Square 

Seller's  Option 

Senior 

Sundries 

Treasurer 

Transportation 

Vice  President 

.      Way  Bill 

Weight 

Year 

.      Yard 


118 


THEORY   OF   BOOKKEEPING 


GLOSSARY 


Acceptance— A  draft  or  bill  of  exchange 
which  the  drawee  has  signified  his  will- 
ingness to  honor;  also  acquiescence  of 
one  in  the  offer  of  another. 

Accommodation  Paper— Notes  issued  or 
drafts  accepted  for  the  purpose  of  enab- 
ling another  to  raise  funds,  it  being  un- 
derstood that  the  person  accommodated 
will  pay  the  obligation  when  due. 

Accountant — One  skilled  in  science  of  ac- 
counts. 

Account  Current— An  open  or  active  ac- 
count; a  statement  thereof  rendered  to 
the  debtor. 

Account  Sales — A  statement  of  the  sums 
realized  on  the  sale  of  a  consignment  and 
showing  the  deductions  made  for  the  ex- 
penses and  commission  incident  thereto. 

Actuary — One  engaged  in  the  compiling  of 
insurance  statistics. 

Agio — Premium  or  discount  on  the  face 
value,  as  on  one  sort  of  money  when  giv- 
en in  exchange  for  an  inferior  sort. 

Annuity — Yearly  payment. 

Appraisement  —  Placing  a  valuation  on 
goods. 

Arbitration — Decision  of  a  dispute  by  a  ref- 
eree or  a  board  of  individuals  appointed 
for  that  purpose,  generally  by  the  parties 
to  the  dispute. 

Attorney — One  authorized  by  law  to  give 
legal  advise  to  another,  called  the  client, 
and  prosecute  and  defend  law  suits. 

Auditor — One  who  examines  into  the  ac- 
curacy of  accounts. 

Balance  of  Trade— The  difference  between 
imports  and  exports  of  merchandise. 

Bank  Draft — A  draft  drawn  by  one  bank 
on  another,  and  generalh'  used  in  mak- 
ing remittances  to  distant  places. 

Bank  of  England— A  banking  institution 
founded  in  London  in  1694  as  a  result  of 
the  financial  embarrassment  of  the  govern- 
ment; now  the  greatest  financial  institu- 
tion in  the  world. 

Bank  of  North  America— The  oldest  bank 
in  the  United  States,  founded  by  Robert 
Morris  in  1782. 


Bankrupt — A  person  who  has  been  judici- 
ally declared  unable  to  meet  his  obli- 
gations. 

Barter  —  The  exchange  of  commodities 
without  the  use  of  money. 

Bear — A  broker  who  has  sold  more  of  a 
commodity  than  he  has  on  hand,  expect- 
ing to  buy  the  same  before  being  obliged 
to  make  delivery  under  his  contracts  of 
sale.  He  is  interested  in  having  the  mar- 
ket prices  decline  so  that  he  may  buy  be- 
low his  selling  price. 

Beneficiary — One  who  receives  a  gift, bene- 
fit or  advantage,  such  as  from,  a  trust 
fund  or  a  state  or  insurance  policy. 

Bill  of  Credit— Bills  of  credit  were  issues  of 
purefiat  money  made  by  order  of  Congress 
during  the  Revolutionary  period  of  our 
history,  upon  no  assets,  having  only  the 
faith  of  the  people  in  the  government  to 
support  them. 

Bill  of  Lading — A  carrier's  receipt  for 
goods  received  for  shipment,  and  con- 
taining a  contract  to  deliver  the  goods  at 
destination;  gwas*  negotiable. 

Bill  of  Sale— A  formally  written  transfer 
of  the  ownership  of  personal  properly. 

Bimetallism— The  use  of  two  metals  (as 
gold  and  silver)  in  the  currency  of  a 
country  at  the  relative  value  fixed  by 
law. 

Board  of  Underwriters— An  association 
composed  of  representatives,  managers, 
or  agents  of  insurance  companies  doing 
business  within  the  state  in  which  the 
association  has  jurisdiction.  Its  princi- 
pal function  is  rate  making  for  the  com- 
panies included  in  its  jurisdiction. 

Bona  Fide— In  good  faith. 

Bonded  Warehouse— One  designed  especi- 
ally for  the  storage  of  imported  goods 
awaiting  payment  of  duties  by  the  im- 
porter; so  called  because  importers  must 
furnish  bonds  with  sufficient  surety  for 
the  payment  of  the  duties. 

Boycott— To  combine  for  the  purpose  of 
abstaining  from  or  preventing  business 
relations  with. 

Brokerage— The  charge  made  by  a  broker 
for  his  services. 


GLOSSARY 


119 


Blldgfet  —  An  annual  financial  statement 
which  the  British  chancellor  of  the  ex- 
chequer makes  in  the  House  of  Com- 
mons; in  a  general  sense  any  annual  fi- 
nancial statement  or  scheme  of  taxation 
and  appropriation. 

Bull— Term  applied  to  a  broker  who  has 
more  of  a  commodity,  stocks  or  bonds  on 
hand  than  he  requires  to  fill  his  contracts 
of  sale,  he  is  therefore  interested  in  rais- 
ing prices  so  that  he  may  sell  at  a  profit. 

By-Laws — Regulations  and  rules  made  by 
the  directors  for  the  internal  government 
of  a  corporation. 

By-Product— A  secondary  product,  such  as 
shale  in  coal  mining. 

Call— A  broker's  right  to  demand  or  call 
for  a  specified  amount  of  stock  at  an 
agreed  price  within  a  certain  fixed  time. 

Call  Loan— Money  borrowed  and  repayable 
when  lender  exercises  his  option  to  call 
for  it. 

Capital  Stock— An  amount,  as  estimated 
by  the  incorporators,  required  for  the 
purpose  of  the  business  of  a  corpora- 
tion. 

Charter — A  document  issued  by  the  state, 
by  which  a  corporation  is  created,  or 
franchise  conferred. 

Chattel  Mortg-ag-e  —  An  incumbrance  of 
personal  property  as  security  for  a  debt. 

Circulation— The  notes  issued  by  a  nation- 
al or  state  bank. 

Clearing"  House— An  establishment  or  as- 
sociation of  banks  to  facilitate  the  set- 
tling of  balances  between  them  by  the 
exchange  of  checks,  drafts,  etc.,  drawn 
on  one  another. 

Collaterals  —  Securities,  generally  stocks 
and  bonds,  put  up  to  insure  the  payment 
of  a  debt. 

Common  Carrier— Any  person,  firm  or  cor- 
poration which  holds  itself  out  to  carry 
goods  or  persons  of  the  public  generally, 
without  preference  or  discrimination. 

Common  Stock— The  ordinary  stock  of  a 
corporation  issued  without  any  special 
agreement  as  to  the  payment  of  divi- 
dends. 

Comptroller— A  public  officer  whose  duty 
it  is  to  examine  and  certify  accounts. 

Consignment — A  shipment  of  goods,  gener- 
ally intended  to  be  sold  on  commission. 

Consolidation — A  merger  or  uniting  of  two 
or  more  interests.  The  consolidation  of 
corporations  is  generally  provided  for  by 
state  laws. 


Consul— A  commercial  agent  of  one 
country  stationed  at  a  port  in  some  other 
country. 

Contract — An  agreement  between  two  or 
more  persons  to  do  or  not  to  do  some  par- 
ticular thing. 

Cooperage— A  charge  for  the  manufacture 
or  mending  of  barrels,  hogsheads,  casks, 
etc. 

Copyrigfht— The  right  of  an  inventor  or  his 
assignee,  to  print  and  publish  his  literary 
or  artistic  work,  exclusive  of  all  other 
persons. 

Corporation — An  association  of  individuals 
existing  under  authority  from  the  state, 
and  authorized  by  law  to  do  business  as  a 
single  individual  under  a  certain  name. 

Credit  Association— A  combination  of  a 
number  of  firms  and  dealers  for  mutual 
protection  against  losses,  particularly  to 
prevent  bad  debts. 

Debenture — An  unsecured  bond. 

Defalcation — An  abstraction  of  trust 
money  by  an  officer  or  agent. 

Defaulter — One  who  appropriates  the  funds 
of  another  to  his  own  use. 

Depreciation— Lessening  of  value  through 
wear  and  tear. 

Devise — A  bequest  of  real  property  by  will. 

Dividend — A  portion  of  the  profits  set  aside 
for  distribution  among  the  shareholders. 

Documentary  Bill— When  merchandise  is 
shipped,  bills  of  exchange  are  drawn  on 
the  consignee,  the  bill  of  lading  being  at- 
tached to  the  draft — these  papers  being 
designated  a  documentary  bill. 

Due  Bill — A  written  acknowledgment  of  a 
debt;  an  I.  O,  U, 

Earnest  Money— A  sum  paid  to  bind  a 
bargain. 

Endorsement^-That  which  is  written  on 
the  back  of  a  note  or  other  paper,  gener- 
ally for  the  purpose  of  transferring  the 
title  thereto  or  strengthening  the  credit 
of  the  maker  or  acceptor. 

Endowment  Policy— Form  of  insurance 
which  provides  that  the  face  of  the  pol- 
icy shall  be  payable  to  the  insured  at  the 
end  of  a  certain  period  if  he  survives,  or 
to  the  beneficiary  therein  named  if  the 
insured  die  within  the  period. 

Equation — An  averaging  of  the  items  of  an 
account  in  such  a  way  that  no  interest 
will  be  lost  to  either  party. 

Exchangee — The  giving  or  taking  of  one 
thing  in  return  for  another.  A  process 
of  settling  accounts  or  debts  between  dis- 


120 


THEORY  OF  BOOKKEEPING 


tant  parties  without  the  use  of  money, 
by  means  of  bills  of  exchange  (often  ab- 
breviated exchange).  The  place  of  transact- 
ing business  (often  contracled  10'  Change). 

Exemption  Laws— Legislation  which  ex- 
empts certain  real  property  (called  the 
homestead)  from  liability  of  attachment 
or  execution  by  creditors.  Certain  per- 
sonal property  is  also  exempted,  and  in 
most  cases  wages  where  the  debtor  is  the 
head  of  the  family.  In  Illinois  the  home- 
stead exemption  is  $1000;  personal 
property  for  married  persons  $400,  for 
single  persons  $100;  wages  $15.00  per  week. 

Facsimile — An  exact  reproduction. 

Fail — To  become  bankrupt  or  insolvent. 

Fiat — An  authoritative  command  or  a 
decree. 

Fiat  Money — Irredeemable  paper  currency. 

Finance — The  science  of  handling  money 
and  receiving  and  expending  public 
revenue. 

Fiscal — Pertaining  to  the  public  treasury. 

Foreclosure — A  legal  proceeding  for  the 
sale  of  incumbered  broperty  for  the 
purpose  of  satisfying  the  incumbrance 
out  of  the  proceeds. 

Full  Stock — Stock  with  a  face  value  of 
$100  per  share. 

Gold  Eeserve— A  fund  of  $150,000,000  set 
aside  in  the  United  States  Treasury  for 
the  redemption  of  greenbacks. 

Good  Will — The  trade  or  reputation  estab- 
lished by  a  business  for  fair  dealing,  or 
the  probability  that  the  customers  will 
return  to  the  old  stand. 

Greenback — One  of  the  legal  tender  notes 
of  the  United  States,  the  design  on  the 
back  being  printed  with  green  ink. 

Gresham's  Law— A  law  of  values  an- 
nounced by  Sir  Thomas  Gresham  several 
centuries  ago,  to  the  effect  that  the 
cheaper  money  always  drives  the  dearer 
money  out  of  circulation,  people  preferring 
to  pay  their  debts  with  the  cheapest 
money  wliich  their  creditors  can  be  in- 
duced or  legally  compelled  to  accept. 

Gross- Without  deduction,  such  as  gross 
weight,  gross  cost.     Twelve  dozen. 

Half  Stock— Slock  at  a  par  value  of  $50.00 
per  share. 

Hazardous — Exposed  to  hazard  or  danger; 
attended  with  risk. 

Honor— To  acknowledge  by  payment  or 
acceptance. 

Hypothecation — A  pledge  of  securities 
such  as  slocks  and  bonds. 


Income — Revenue  from  labor,  business, 
property  or  capital. 

Indenture — A  mutual  agreement  in  writing 
between  two  or  more  parties  whereof  each 
has  usually  a  counterpart  or  duplicate. 
They  were  originally  notched  or  indented 
so  as  to  correspond  to  each  other. 

Industrial  Insurance— A  class  of  insur- 
ance issued  on  persons  of  all  ages  from 
one  to  seventy  years  and  in  small 
amounts  to  persons  of  limited  means. 

Industrials— Stocks  of  manufacturing 
companies. 

Interstate  Commerce  Law — An  act  of 
Congress  passed  in  1887  designed  to 
regulate  commerce  between  the  states. 
It  applies  to  common  carriers  by  land  or 
water  who  do  business  in  two  or  more 
states  or  territories  and  provides  against 
discrimination  between  large  or  small, con- 
stant or  occasional  shippers,  and  that  no 
charges  should  be  unjust  or  unreasonable. 

Intestate — One  who  dies  without  leaving 
a  will. 

Interim  Dividends— A  division  of  profits 
before  the  regular  annual  or  semi-annual 
dividend  is  declared. 

Intrinsic  Value — Real  or  inner  worth  as 
distinguished  from  face  or  apparent 
value. 

Inventory— A  list  of  goods  on  hand. 

I.  0.  U. — I  owe  you.  The  acknowledge- 
ment of  a  debt. 

Judg'ment  Note— A  note  containing  a 
clause  authorizing  any  attorney  of  record 
to  confess  judgment  against  the  maker 
of  the  note  if  default  is  made  in  payment. 

Jobber — One  who  buys  from  wholesalers 
and  sells  to  retailers. 

Kiting — The  incurring  of  a  fresh  obligation 
to  discharge  an  old  one,  as  by  exchanging 
checks  with  a  confederate. 

Lease — A  letting  of  lands  or  buildings  to 
another  for  a  term  of  years,  usually  for  a 
specified  rent  or  compensation. 

Leasehold — Tenure  by  lease;  land  held  as 
personalty  under  a  lease  for  years. 

Leg'acy— A  bequest  of  money  or  personal 
property  by  will. 

Level  Premium— Uniform  payments  of 
premium  on  a  life  insurance  policy. 

Liquidate — To  determine  by  agreement  or 
by  litigation  the  amount  of  an  indebted- 
ness; to  pay  off. 

Liquid  Assets— Assets  in  cash  or  readily 
convertible  into  cash.  Listed  securities, 
stocks   or  bonds  included  in   the  list  of 


GLOSSARY 


121 


those  admitted  to  dealing  at  the  exchange 
Liquidation— To  assign  to  a  trustee  one's 

assets    and  accounts,  so  as  to  settle  one's 

liabilities. 
Loading" — A  term  used  to  denote  additions 

to  the  basis  rate  of  insurance  on  account 

of  location  or  other  special  conditions. 
Long" — A  term  applied  to  a  broker  who  has 

more  of  a  given  commodity  on  hand  than 

he  requires  to  fill  his  contracts. 
Maceration— The    grinding    of    old    worn 

paper  money  into  pulp. 
Mail  Order — An  order  for  goods  received 

by  mail. 
Manipulate — To   control  or  manage;  also, 

to  manage  artfully  or  fraudulently. 
Margin — Collateral  security  or  money  de- 
posited with  a  broker  to  secure  him  from 

loss  on  contracts  entered  into  bj'^  him  on 

the  behalf  of  his  principal. 
Mercantile — Pertaining  to  the  business  of 

merchants. 
Mileage— Distance  travelled.    The  number 

of  miles  in  a  railroad. 
Mint — A  place  where  money  is  coined. 
Minutes — A  record  of  the  proceedings  of  a 

meeting   recorded    in    a    book    called    a 

minute  book. 
Monetary — Pertaining  to  money. 
Monometallism— The  legalized  use  of  one 

metal  only  in  the  standard  currency  of  a 

country,  or  as  a  standard  of  value. 
Monopoly— Exclusive  control. 
Mortgage — A  pledge  of  property,  real  or 

personal,  as  security  for  a  debt. 
Mortgage— A  formal  transfer  of  property 

as  security  for  a  debt. 
Municipal — Pertaining  to  a  city  or  corpo- 
ration having  the  right  of  administering 

local  government. 
Municipality — A  city  or  incorporated  town 

or  village. 
Negotiate— To   treat   with    another    in   a 

matter  of  business.    To  sell   or   transfer 

commercial  paper. 
Net — Clear  of  all  expenses,  as  net  earnings; 

without  discount  or  deduction,  as  a  price. 
Net  Proceeds— Proceeds   after  making  all 

deductions. 
New  York  Standard  Policy— A  form  of 

fire   insurance     policy  prescribed  oy  the 

legislature  of  New  York  and  adopted  by 

a   large   number    of  states   as  the  legal 

policy. 
Non  Cumulative  Stock— Stock   on   which 

passed  dividends  must  be  made  good. 


Notary  Public— An  officer  authorized  to 
take  acknowledgments,  administer  oaths, 
protest  paper,  etc. 

Old  Lady  of  Threadneedle  Street-The 
Bank  of  England. 

Open  Policy — An  insurance  policy  covering 
a  fluctuating  stock  of  goods. 

Outlawed— Barred  by  the  statutes  of  lim- 
itations, as  an  outlawed  debt. 

Over  Draft — A  balance  at  the  bank  against 
the  depositor  because  his  checks  exceed 
his  funds  on  deposit  there. 

Par— Face  value,  100%. 

Parent  Company — A  company  from  which 
other  companies  derive  an  authority  or 
upon  which  they  are  dependent. 

Parol — Oral  or  written,  but  not  under 
seal;  as  parol  contracts. 

Pass  Book — A  book  kept  by  one  who  has 
money  on  deposit  in  the  bank  and  show- 
ing the  deposits  made  by  him,  and  in 
case  of  a  savings  account  also  the  with- 
drawals and  the  balance. 

Patent — The  right  granted  by  a  govern- 
ment to  the  exclusive  control  of  an  in- 
vention or  of  the  sale  of  certain  articles. 

Pecuniary— Relating  to  money. 

Petty — Little  or  small,  as  Petty  Cash,  Petty 
Expenses. 

Pledge — Transfer  of  the  possession  of 
personal  property  as  security  for  the 
payment  of  a  debt. 

Policy — Prudence  or  wisdom;  as  business 
policy.  An  insurance  contract  to  pay  a 
certain  sum  as   an  indemnity. 

Post-dated — Bearing  a  future  date. 

Power  of  Attorney— A  formal  instrument 
conferring  authority  upon  an  agent. 

Preferred  Stock— Shares  which  have  a 
definite  rate  of  dividend  guaranteed  upon 
them. 

Proposition — An  offer  made  by  one  person 
to  another,  oral  or  written. 

Pro-rata — At  a  proportionate  rate. 

Protest — A  formal  statement  of  a  notary 
of  the  non-payment  of  a  note  or  draft  at 
maturity. 

Proxy — ^A  person  authorized  to  represent 
another,  particularly  at  directors'  and 
stock  holders'  meetings.  The  authority 
itself. 

Put — The  right  a  broker  has  under  his 
contract  to  make  delivery  to  another  of  a 
specified  amount  of  stock  at  an  agreed 
price  WMthin  a  certain  time. 

Quarter  Stock— Stock  at  a  par  of  $25  per 
share. 


122 


THEORY  OF  BOOKKEEPING 


Quick  Assets — Property  readily  convertible 
into  cash. 

Receiver — A  trust  appointed  by  the  court 
to  receive  and  hold  property  in  litigation, 
pending  the  suit;  a  person  appointed  to 
take  charge  of  the  property  in  the  inter- 
est of  creditors. 

Receiver's  Certificates— Evidences  of  in- 
debtedness issued  by  a  receiver  for  the 
purpose  of  raising  money  to  operate  the 
property  in  his  charge,  the  holders  of 
such  certificates  having  a  first  lien  on  the 
assets  in  his  hands. 

Redemption  Fund— A  sum  set  aside  at 
regular  intervals  in  order  to  meet  a 
future  liability. 

Refunding: — The  process  of  putting  out  a 
new  issue  of  bonds  to  replace  an  old  one. 

Regfistered  Bond— A  bond  recorded  in  the 
owner's  name. 

Reg-istered  Coupon  Bond— Bond  with  in- 
terest coupons  attached  payable  to  bearer, 
but  itself  payable  only  to  the  owner. 

Registrar — A  keeper  of  the  records  of 
transfers  of  securities,  verifying  the 
signatures  of  transfers, 

Reimburse— To  repay  the  amount  of  ex- 
penditure made  by  one  person  in  behalf 
of  another. 

Release — To  relinquish  a  claim. 

Remittance— The  act  of  sending.  The 
money  sent. 

Reorgfanization — Compulsory  financial  re- 
construction. 

Rest — A  surplus  or  reserve.  Tlie  term  is 
also  specifically  applied  to  the  surplus 
fund  of  the  bank  of  England. 

Salary — Compensation  for  services  general- 
ly not  of  a  manual  character. 

Sale — The  transfer  of  a  commodity  for  a 
money  consideration. 

Salvagfe — The  compensation  allowed  to  a 
person  assisting  in  saving  the  ship  or  her 
cargo  from  peril.  That  part  of  the  prop- 
erty that  is  saved  from  peril. 

Scrip — A  certificate  for  a  fractional  share 
of  stock,  exchangeable  for  shares  when 
presented  in  sufficient  quantities. 

Securities — Stocks  or  bonds  of  corporations 
either  public  or  private;  also  real  estate 
mortgages. 

Securities  Company— A  company  owning 
the  securities  of  other  companies  and  de- 
pending for  its  income  upon  the  income 
derived  from  such  securities. 

Seigfnioragre— A  charge  or  toll  deducted 
from  bullion,    brought   to  a   mint  to  be 


coined;  the  difference  between  the  cost  of 
a  mass  of  bullion  and  the  value  as  money 
of  the  pieces  coined  from  it . 

Sellers'  Option— A  put. 

Serial  Bonds — Bonds  redeemable  in  speci- 
fied installments. 

Set  Off — Counter  claim. 

Short — A  term  applied  to  a  broker  contract- 
ed to  sell  more  of  a  commodity  than  he 
has  on  hand,  expecting  to  purchase  same 
before  delivery  day. 

Singfle-named  Paper— Unendorsed  paper. 

Slow  Assets — Property  not  to  be  quickly 
turned  into  cash. 

Specially — A  written  contract  under  seal. 

Spot  Cash — Cash  remitted  at  once. 

Statute  of  Frauds— A  law  enacted  by  Par- 
liament in  1677requiring certain  contracts 
to  be  in  writing  and  re-enacted  by  most  of 
the  states  of  the  Union. 

Stock — Shares  in  a  corporation;  also  mer- 
chandise. 

Subsidiary  Company  — A  company  the 
stock  of  which  is  owned  or  controlled  by 
another  company. 

Subsidy— The  gift  of  a  sum  of  money  eith- 
er annual  or  otherwise,  by  the  government 
as  an  aid  and  encouragement  to  the  ex- 
tension and  upbuilding  of  marine  inter- 
ests. 

Surety — One  who  agrees  to  answer  for  the 
debt  or  default  of  another. 

Surplus — Profits  reserved  from  distribution 
in  order  to  lend  financial  strength  to  tlie 
company,  or  to  enable  it  to  declare  uni- 
form dividends  from  time  to  time. 

Syndicate — A  number  of  capitalists  united 
to  finance  and  carry  out  some  plan  or 
scheme. 

Teller — One  who  counts  money,  especially 
at  a  bank.  The  receiving  teller  receives 
the  money;  the  paying  teller  disburses  it. 

Ticker  —  A  small  telegraphic  instrument 
through  which  runs  a  narrow  paper  tape 
on  which  the  instrument  prints  automa- 
tically the  names  and  prices  of  stocks 
and  bonds  in  an  abbreviated  form. 

Tickler — A  record  of  notes  and  debts  ac- 
cording to  maturity,  so  as  to  remind  one 
when  they  fall  due. 

Transfer  Agfent — An  officer  authorized  to 
transfer  a  company's  stock. 

Treasury  Stock— Shares  reserved  in  the 
hands  of  the  treasurer  of  a  corporation  to 
be  sold  or  given  away  in  the  future  as  oc- 
casion may  require  for  the  promotion  of 
the  business. 


GLOSSARY 


123 


Trust — To  place  confidence  in  or  rely  on, 
or  to  give  credit  to;  also  applied  to  a  com- 
bination of  the  capitail  of  several  corpora- 
tions under  one  management  for  the  pur- 
pose of  reducing  the  cost  of  production, 
limiting  the  output,  and  controlling  the 
cost  of  the  article  to  the  consumer. 

Underlying'  Mortgage— A  prior  mortgage. 

Underwriter — One  who  underwrites  an  in- 
surance policy  especially  a  marine  policy; 
also  applied  to  banks  and  trust  companies 
who  contract  to  sell  stocks  or  bonds  for 
corporations,  taking  themselves  such  as 
they  do  not  dispose  of  by  a  given  time. 

Undivided  Profits — Profits  earned  but  not 
set  aside  to  stockholders  in  the  form  of 
dividends. 

Usury— An  exaction  of  an  illegal  rate  of  in- 
terest. 

Voucher — A  book,  paper  or  document  serv- 
ing to  vouch  the  truth  of  accounts,  or  to 
confirm  or  establish  any  fact. 


Wages— Compensation  for  labor. 

War  Chest— (Kriegskasse)  a  store  or  large 
reserve  of  gold  kept  on  hand  by  the  Ger- 
man government  as  an  emergency  fund 
to  be  used  in  time  of  war. 

Watered  Stock — Shares  issued  in  excess  of 
a  corporation's  assets  but  within  the  au- 
thorized capital. 

Will — A  final  disposition  of  a  person's  pro- 
perty, not  to  take  etfect  till  the  time  of 
his  death.  An  addition  or  supplement  to 
a  will  is  called  a  codicil. 

Window  Dressing— The  art  of  displaying 
goods  in  the  show  windows  of  merchants 
for  the  purpose  of  attracting  trade. 

Working  Capital — Money  necessary  for 
operating  a  business. 

World's  Clearing  House— A  name  given 
to  London  because  it  is  practically  the 
center  of  exchanges  of  the  world,  the 
Bank  of  England  being  the  greatest  fi- 
nancial institution  in  the  world. 


124 


THEORY  OF  BOOKKEEPING 


GENERAL  INDEX 


Abbreviations 

116 

Footing 

, 

44 

Acceptance 

21 

Freight  Classification 

.     86 

Accounts 

.     39 

Gains  and  Losses 

31, 

48,  51 

Account  Sales 

27 

General  Ledger     . 

.     94 

Analysis  of  Accounts 

.      '       .     50 

Glossary 

. 

118 

Assets    .... 

38 

Honoring  Drafts 

. 

18 

Auxiliary  Book 

.       4 

Interest 

24,  51 

Balance  Sheet 

51 

Inventory 

46 

Bank  Draft 

,.     66 

Invoice  Book 

. 

89,  91 

Bill  (Invoice)    . 

9 

Item       . 

4 

Bill  of  Exchange 

.     18 

Jobber 

. 

.     89 

Bill  of  Lading 

.    26,  87 

Journal              . 

5,  7 

Bills  Payable 

12,  47,  50,  92 

Journalizing 

.       5 

Bills  Receivable 

12,  47,  50,  92 

Ledger 

39 

Bookkeeping 

.       3 

Liabilities 

.     33 

Card  Ledger     .    . 

71 

Loose  Leaf  Ledger 

71 

Cash 

.      6,  47,  50 

Loss  and  Gain 

.     31, 

48,  51 

Cash  Book 

70,  74,  80,  92 

Maker                .           '. 

. 

12 

Cash  Discount 

06,  81 

Maturity 

.     12 

Changing  from  S.  E.  to  D.  E. 

79 

Merchandise     . 

6, 

47,  50 

Checking 

.     44 

Monthly  Statements 

.     65 

Classification  of  Accounts 

46 

Net  Capital 

33 

Closing  the  Ledger 

.     46 

Net  Insolvency 

. 

.     33 

Commission  Merchant 

26 

Opening  Accounts 

42 

Consignment  Accounts 

26,  50 

Order  Book 

. 

.     69 

Credit 

4 

Order  Register 

90 

Credit  Man 

.     90 

Order  Sheet  or  Blank 

. 

.     90 

Current  Accounts 

71 

Original  Entry 

4 

Day  Book 

70,  73 

Partnership 

.     35 

Debit      .... 

4 

Payee 

12,  18 

Discount 

29,  51 

Personal  Accounts 

9,  10, 

48,  51 

Drafts 

.    18,  21 

Posting 

39 

Drawee 

.     18 

Principal  Book 

.      4 

Drawer 

18 

Profit  and  Loss 

31, 

48,  51 

Endorser 

.     12 

Promissory  Notes 

.     12 

Envelope  System 

70 

Proprietor 

33, 

49,  51 

Exchange 

29,  51 

Purchase  Ledger 

89,  94 

Expense 

31,  47,  51 

Real  Estate      . 

. 

6,  50 

Explanatory  Journal 

.     94 

Receipt 

.     10 

Filling  Orders 

86 

Remittances     . 

. 

66 

Financial  Accounts 

.     46 

Resources 

.     33 

Financial  Statement 

59 

Retail  Accounting 

, 

69 

Fixtures 

.      6 

Revenue  Accounts 

, 

.     46 

GENERAL  INDEX 


125 


Review  Questions 

37.  G4,  85,  115 

Sales  Book 

.     91 

Sales  Ledger 

94 

Sight  Dralt 

.21 

Single  Entry     . 

.      3,  69 

Shipment  Accounts 

48,  50 

Shipping  Clerk 

86 

Shipments,  Checking  of 

.     86 

Shipments,  Routing 

78 

Statement  of  Account 
Stocks  and  Bonds 
Sundries 
Time  Drafts     . 
Transferred  Accounts 
Trial  Balance 
Wholesale  Accounting 
Working  Balance  Sheet 


65 
6 
15 
21 
71 
45 
89 
51 


INDEX  TO  FORMS 


Acceptance 

. 

.     21 

Journal 

7 

Account 

. 

89 

Ledger 

.    43 

Bank  Draft 

.     66 

Monthly  Statement 

65 

Bill  (Invoice) 

. 

9 

Order  Blanks 

70,  90 

Bill  Book 

.            .     92 

Perpetual  Ledger 

.    76 

Bill  of  Lading 

. 

88 

Profit  and  Loss  Account 

48 

Bills  Receivable    . 

.     49 

Receipt 

.     10 

Cash  Book 

74, 

75,  80,  81,  92 

Remittance  Letter 

67 

Day  Book 

.     73 

Sales  Book 

.    91 

Draft     . 

. 

18 

Financial  Statement 

.     59 

Sales  Recapitulation  . 

91 

Inventory 

, 

47 

Trial  Balance 

.     45 

Invoice  Book 

. 

.     91 

Working  Balance  Sheet 

52 

p 


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